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HomeMy WebLinkAboutR28-Economic Development Agency . CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY ORIGINAL FROM: Maggie Pacheco Executive Director SUBJECT: Joint Public Hearing - 2006 Affordable Single- Family Disposition and Development Agreement (HOME Funds-Four Agency Lots) - Arroyo Valley Community Economic Development Corporation and Inland Empire Concerned African American Churches DATE: November 14, 2006 Svnopsis of Previous Commission/Council/Committee Actionfs): On August 8, 2006, Redevelopment Committee Members Estrada, Baxter and Johnson unanimously voted to recommend that the Community Development Commission consider this action for approval subject to Agency Staff resolving ownership of the four (4) Agency Lots. Recommended Motionfs): Open/Close Public Hearing (Mavor and Common Council) A: Resolution of the Mayor and Common Council of the City of San Bernardino approving an amendment to the 2005- 2010 Consolidated Plan and the 2006-2007 Annual Action Plan and consenting to the disposition of certain properties located in the City of San Bernardino on 16th and Harris Streets (APN: 0144-131-21) and 17th and "J" Streets (APN: 0144-131-36,0144-123-03 and 46) ("Agency Lots"), by the Redevelopment Agency of the City of San Bernardino ("Agency") pursuant to the terms of the 2006 Affordable Single-Family Disposition and Development Agreement (HOME Funds-Four Agency Lots), by and between the Agency, Arroyo Valley Community Economic Development Corporation and Inland Empire Concerned African American Churches - IVDA Redevelopment Project Area fCommunitv Development Commission) B: Resolution of the Community Development Commission of the City of San Bernardino approving the disposition of certain properties located in the City of San Bernardino on 16th and Harris Streets (APN: 0144-131-21) and 17th and "J" Streets (APN: 0144-131-36, 0144-123-03 and 46) ("Agency Lots"), by the Redevelopment Agency of the City of San Bernardino ("Agency") and authorizing the Executive Director of the Agency to execute the 2006 Mfordable Single-Family Disposition and Development Agreement (HOME Funds-Four Agency Lots), by and between the Agency, Arroyo Valley Community Economic Development Corporation and Inland Empire Concerned African American Churches - IVDA Redevelopment Project Area Contact Person(s): Maggie Pacheco IVDA Redevelopment Project Area Phone: (909) 663-1044 6 Project Area(s): Ward(s): Supporting Data Attached: It! Staff Report It! Resolution(s) It! Agreement(s)/Contract(s) 611 Map(s) 0 Letter(s) FUNDING REQUIREMENTS: $ 593,200 Source: Federal HOME Funds Budget Authority: 2006-2007 EDA Budget Commission/Council Notes: /<~O ~/~;;!// /l~ -, Z;/ P:\Agendas\Comm Dev Commission\CDC 2006\11-2(}'()6 Anoyo - HOllE I-unds Developmem AgreeJD.lnt Final SR.doc COMMISSION MEETING AGENDA Meeting Date: 1112012006 Agenda1tem Number: -Rn ,- ECONOMIC DEVELOPMENT AGENCY STAH REPORT JOINT PUBLIC HEARING - 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS-FOUR AGENCY LOTS) - ARROYO V ALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION AND INLAND EMPIRE CONCERNED AFRICAN AMERICAN CHURCHES BACKGROUND/CURRENT ISSUE: The Inland Empire Concerned African American Churches, a California public benefit corporation (the "Participant"), located at 1583 West Union Street, San Bernardino, is a 501(c)(3) corporation with a variety of objectives including, but not limited to (i) providing education, training, employment and economic development to the community and (ii) serving as a focal point and support vehicle for residents by providing technical support and other related expertise through seminars, forums and programs. The Participant has requested that the A~ency donate four (4) properties located in the 6th Ward of the City of San Bernardino ("City") on 16t and Harris Streets (APN: 0144-131-21) and 17th and "J" Streets (APN: 0144-131-36, 0144-123-03 and 46) ("Agency Lots") to assist them in fulfilling one of their community objectives (See attached map). On July 18, 2005, the Community Development Commission ("Commission") approved the donation of the Agency Lots to the Participant for the construction of four (4) new single-family in-fill homes ("New Homes") for the benefit of low-income home buyers. On May 5, 2005, the Participant entered into a Development Agreement with Arroyo Valley Community Economic Development Corporation ("Developer"), retained for a fee, to construct the New Homes on the Agency Lots ("Project"). The principals of the Developer have the background, experience and financial resources needed for the Project and the principals have developed other in- fill single-family homes in and around the City. The Developer is a 501(c)(3) corporation. Since the execution of the Development Agreement between the Participant and the Developer, the Developer has secured the required construction financing from Arrowhead Federal Credit Union for Nine Hundred Sixty Thousand Eight Hundred One Dollars ($960,801) of the total Project cost of One Million Three Hundred Seventy-Seven Thousand Four Hundred Thirty-Four Dollars ($1,377,434). The Developer will be responsible for and bear all the risks associated with the construction loan repayment; therefore, it is requested that the Agency Lots be transferred to the Developer and the Participant. Staff has reviewed Arroyo's application and certified Arroyo as a Community Housing Development Organization ("CHDO") with title to be held jointly per federal HOME requirements, and Arroyo is eligible to receive HOME funding under the fifteen percent (15%) CHDO requirement and the five percent (5%) operating expenses as per the 2005-2010 Five-Year Consolidated Plan and 2006-2007 Annual Action Plan approved on May 15,2006, by the Mayor and Common Council. On August 8, 2006, the Redevelopment Committee approved the proposed agreement between the Agency, the Participant and the Developer ("Agreement"), subject to Staff's meeting with the Developer and the Participant's representatives to resolve ownership of the Agency Lots. On August 10, 2006, Staff met with representatives of the Participant and the Developer to discuss the matter and both parties agreed to take joint ownership of the Agency Lots. Subsequent meetings were held to finalize the Agreement. PIAgendaslComm De... CommisSlonlCDC 2006\11.20.06 Arroyo - Home Funds Developmenl Agreement Final SR doc COMMISSION MEETING AGENDA Meeting Date: 11/20/2006 Agenda Item Number: Economic Development Agency Staff Report Arroyo - Home Funds Development Agreement Page 2 Consequently, Staff proposes to enter into an Agreement with the Developer and Participant, which will contain the following salient points: . The Agency will transfer the Agency Lots to the Developer and Participant at no cost; . The Participant and the Developer have entered into a Development Agreement dated March 3, 2006, for the development of the New Homes of not less than approximately 1,300 square feet with three (3) bedrooms, two (2) bathrooms and a two (2) car garage that will be developed in compliance with the City's zoning and development standards as approved by the Development Services Department; . The homes will be marketed and sold by both the Participant and the Developer to eligible low- income homebuyers with incomes not exceeding eighty percent (80%) of the San Bernardino County median income under the terms of a marketing agreement; . The Agency will provide a grant of Three Hundred Fifty-Three Thousand Two Hundred Dollars ($353,200) from Federal HOME CHDO and HOME Project Funds, out of which One Hundred Ninety Thousand Dollars ($190,000) is earmarked for predevelopment costs for architect, engineering, permit fees, etc., to the Developer and the Participant which will be disbursed for predevelopment costs; thereafter and during the course of construction, upon presentation to the Agency of third party invoices, One Hundred Sixty-Three Thousand Two Hundred Dollars ($163,200) in construction gap financing will be made available from HOME CHDO and HOME Project Funds on a cost reimbursement basis after the construction loan has been expended. This grant will be combined with the Developer's construction loan of Eight Hundred Seventy-Eight Thousand Dollars ($878,000) to make up the total construction funds needed to construct the New Homes; . At the completion of the Project and the sale of the New Homes, the Developer will cause to be built at least two (2) additional affordable housing units, available to low income households; . The Agency will provide up to Two Hundred Forty Thousand Dollars ($240,000) in HOME Funds for downpayment assistance to eligible low-income homebuyers. Each homebuyer will be required to sign a forty-five (45) year HOME Covenant (CC&R) ensuring occupancy and maintenance of the New Home; . Should any profits remain after the construction loan repayment, the funds will be used to assist homebuyers with additional downpayment as needed and the remaining balance will be split Fifty/Fifty (SO/50) by the Participant and the Developer. If no profit is realized from the sale of the homes, the Developer and the Participant are responsible for providing additional downpayment funds as may be needed by the homebuyer to complete the sale through pre-arranged financing by the Developer and the Participant. P:\Agcndas\Comm f)ev Conunission\CUC 2006\11-20-06 Amlyo - HOIBl Funds Development Agreement Final SR.doc COMMISSION MEETING AGENDA Meeting Date: 11120/2006 Agenda Item Number: Economic Development Agency Staff Report Arroyo - Home Funds Development Agreement Page 3 Prior to the approval of the Agreement, an amendment to the City's 2005-2010 Consolidated Plan and 2006-2007 Annual Action Plan are required to allocate Five Hundred Ninety-Three Thousand Two Hundred Dollars ($593,200) in Federal HOME CHDO and HOME Project Funds to the Developer and the Participant. This joint public hearing will be held in compliance with the California Redevelopment Law and the City approved Citizen's Participation Plan. ENVIRONMENTAL IMPACT: This request is exempt under the National Environmental Policy Act (NEPA) pursuant to 24 CFR 58.35(a) and California Environmental Quality Act (CEQA), pursuant to S 15332, Class 32, which consists of projects characterized as in-fill development meeting the following conditions: (a) the Project is consistent with the applicable general plan, applicable zoning designation and regulations; (b) the proposed Project occurs within city limits and is not more than five (5) acres; (c) the Project site has no value as habitat for endangered, rare or threatened species; (d) the Project would not result in any significant effects relating to traffic, noise, air quality or water quality; and (e) the Project is adequately served by all required utilities and public services. FISCAL IMPACT: The Five Hundred Ninety-Three Thousand Two Hundred Dollars ($593,200) in Federal HOME CHDO and HOME Project Funds are available and budgeted in the 2006-2007 EDA budget. RECOMMENDATION: That the Mayor and Common Council and the Community Development Commission adopt the attached Resolutions. ) / . / V - Maggie Pacheco, P:\Agcndas\C:omm Dev Commissinn\COC 2006\] 1-20-06 Arroyu - Homc Funds Development Agrccmcnll'inal SR.doc COMMISSION MEETING AGENDA Meeting Date: 11120/2006 Agenda Item Number: /:'F (../'? I . I . , , ,. I I ! , , , I I l , I , 0>,,,,..., j ""l< " .'"" ; Foo<I'liUIJv S"'ll i , R....,_. ........ NORTH Nollo Scale 8anBernar IUO ~ City of San Bernardino ..Iftl! "" --J '~--l 'om!~ . . ----I : I , --~,--",.", B.,...n. i SIn!l , , o '-'<'1\' , ......~Di_ - ! < ~ \an8<!ma,.,;""A_ I $ 11<>1.."", IJvd 1 2 3 4 5 6 7 8 9 10 11 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AN AMENDMENT TO THE 2005-2010 CONSOLIDATED PLAN AND THE 2006-2007 ANNUAL ACTION PLAN AND CONSENTING TO THE DISPOSITION OF CERTAIN PROPERTIES LOCATED IN THE CITY OF SAN BERNARDINO ON 16TH AND HARRIS STREETS (APN: 0144-131-21) AND 17TH AND "J" STREETS (APN: 0144-131- 36,0144-123-03 AND 46) ("AGENCY LOTS"), BY THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") PURSUANT TO THE TERMS OF THE 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS-FOUR AGENCY LOTS), BY AND BETWEEN THE AGENCY, ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION AND INLAND EMPIRE CONCERNED AFRICAN AMERICAN CHURCHES - IVDA REDEVELOPMENT PROJECT AREA WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a 12 public body, corporate and politic, exercising governmental functions and powers and organized and 13 existing under Chapter 2 of the Community Redevelopment Law of the State of California (Health 14 and Safety Code Section 33020, et seq.); and 15 WHEREAS, the City of San Bernardino ("City") is an entitlement city and eligible to 16 participate in the United States Department of Housing and Urban Development's (HUD) 17 Community Development Block Grant (CDBG), HOME and Emergency Shelter Grant (ESG) 18 Programs and has prepared and approved the 2005-2010 Consolidated Plan and program year 2006- 19 2007 Annual Action Plan; and 20 WHEREAS, the City has designated the Agency to implement the requirements and 21 obligations of Federal programs in the City; and 22 WHEREAS, the Mayor and Common Council (the "Council") desire to amend the 2005- 23 2010 Consolidated Plan and the 2006-2007 Annual Action Plan to include the Five Hundred Ninety- 24 Three Thousand Two Hundred Dollars ($593,200) HOME Community Housing Development 25 Organization ("CHDO") and HOME Project Funds appropriation; and 26 WHEREAS, the Agency, in compliance with the Citizen Participation Plan and 24 CFR 27 570.302 and 24 CFR 91.105 has published in the San Bernardino County Sun newspaper on October 28 21,2006 and November 13, 2006, the required Public Notice amending the 2005-2010 Consolidated I P:\Agcndas\Rcsolutions\Rc.';olutil)ns\2006\1 ]-20-0(i Arroyo & Churches DDA MCC Rcso A.doc 1 Plan and 2006-2007 Annual Action Plan allocating Two Hundred Forty Thousand Dollars 2 ($240,000) in HOME Funds downpayment assistance, Three Hundred Fifty-Three Thousand Two 3 Hundred Dollars ($353,200) in Federal HOME CHDO and HOME Project Funds for a total of Five 4 Hundred ninety-Three Thousand Two Hundred Dollars ($593,200) towards the development of four 5 (4) single-family in-fill homes ("New Homes") and to provide downpayment assistance to low- 6 income households to purchase the homes ("Project"); and 7 WHEREAS, the Agency has certified the Developer as a CHDO, after providing 8 documentation meeting all the requirements of 24 CFR 92.300 and is eligible to receive HOME 9 Funds under the fifteen percent (15%) CHDO federal requirement; and 10 WHEREAS, the Agency owns real properties located on 16th and Harris Streets (APN: 0144- 11 131-21) and, 17th and "J" Streets (APN: 0144-131-36, 0144-123-03 and 46) ("Agency Lots") which 12 will be developed into New Homes jointly by Arroyo Valley Community Economic Development 13 Corporation, a California non-profit benefit corporation ("Developer"), and the Inland Empire 14 Concerned African American Churches, a California non-profit corporation ("Participant"), per the 15 2006 Affordable Single-Family Disposition and Development Agreement (HOME Funds-Four 16 Agency Lots) (the "Agreement"); and 17 WHEREAS, the Agency seeks to transfer the Agency Lots to the Developer and the 18 Participant for the development of the New Homes to be sold to qualified homebuyers for the 19 purpose of providing affordable housing consistent with the provisions of the Redevelopment Plan 20 for the IVDA Redevelopment Project Area and the Agency's Housing Implementation Plan, the 21 2005-2010 Consolidated Plan, 2006-2007 Annual Action Plan and the Agreement ("Plans"); and 22 WHEREAS, pursuant to Health and Safety Code Section 33433(c), the Agency may transfer 23 the Agency Lots to the Developer and the Participant subject to the Council's consent to such 24 Agency Lots transfer in light of the findings set forth herein; and 25 WHEREAS, the Project is exempt under the National Environmental Protection Act (NEPA) 26 per 24 CFR 58.35(a) and the California Environmental Quality Act (CEQA) pursuant to Section 27 15332, Class 32. 28 2 J>:\Agcndas\Rcsolutions\Rcsoll.ltions\20116\11-20-06 Arrnyo & Chun:hes DDA Mec RcSIJ A.doc I NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY 2 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS 3 FOLLOWS: 4 Section L On November 20, 2006, the Council conducted a full and fair joint public 5 hearing with the Community Development Commission ("Commission") relating to the amendment 6 of the 2005-2010 Consolidated Plan and the 2006-2007 Annual Action Plan and the disposition of 7 the Agency Lots to the Developer and the Participant for the development of homes for sale to 8 qualified homebuyers in order to effectuate the provisions of the Agreement. The minutes of the 9 City Clerk shall include a record of all communication and testimony submitted to the Council and 10 the Commission by interested persons relating to the joint public hearing. 11 Section 2, This Resolution is adopted in order to satisfy the provisions of Health and 12 Safety Code Section 33433(c) as it relates to the disposition of the Agency Lots. The 13 Council hereby finds and determines that the disposition of the Agency Lots to the Developer and 14 the Participant for the construction of the New Homes for sale to qualified home buyers is consistent IS with the Plans. 16 Section 3. The Council hereby finds and determines that no further environmental 17 review of the disposition of the Agency Lots pursuant to the Agreement is necessary at this time, 18 under CEQA and development of the Project under both CEQA and NEPA. 19 Section 4. The Council hereby approves the amendment to the 2005-2010 Consolidated 20 Plan and the 2006-2007 Annual Action Plan to include the $593,200 HOME Community Housing 21 Development Organization and HOME Project Funds, and the Council consents to the disposition 22 and transfer of the Agency Lots to the Developer and the Participant pursuant to the terms of the 23 Agreement. 24 Section 5. This Resolution shall take effect upon its adoption and execution in the 25 manner as required by the City Charter. 26 III 27 III 28 III 3 P\Agendas\ResoIUlions\Resolu\;ons\2006\11.20.06 Arrovo & Churches DDA MCC Reso A doc 1 2 3 4 5 6 7 8 9 10 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO APPROVING AN AMENDMENT TO THE 2005-2010 CONSOLIDATED PLAN AND THE 2006-2007 ANNUAL ACTION PLAN AND CONSENTING TO THE DISPOSITION OF CERTAIN PROPERTIES LOCATED IN THE CITY OF SAN BERNARDINO ON 16TH AND HARRIS STREETS (APN: 0144-131-21) AND 17TH AND "J" STREETS (APN: 0144-131- 36,0144-123-03 AND 46) ("AGENCY LOTS"), BY THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") PURSUANT TO THE TERMS OF THE 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS-FOUR AGENCY LOTS), BY AND BETWEEN THE AGENCY, ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION AND INLAND EMPIRE CONCERNED AFRICAN AMERICAN CHURCHES - IVDA REDEVELOPMENT PROJECT AREA I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a 11 meeting thereof, , 2006, by the following vote to wit: Abstain Absent Rachel G. Clark, City Clerk 22 23 The foregoing resolution is hereby approved this 24 25 day of ,2006. Patrick J. Morris, Mayor City of San Bernardino 26 Approved as to Form: 27 28 4 P:\Agendas\RcsoJUlions\RcsulUlions\2006\J 1-20-06 Arroyu & Churclx:s DnA MCC ReM) A.tloe 1 2 RESOLUTION NO. RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE DISPOSITION OF CERTAIN PROPERTIES LOCATED IN THE CITY OF SAN BERNARDINO ON 16TH AND HARRIS STREETS (APN: 0144-131-21) AND 17TH AND "J" STREETS (APN: 0144-131-36,0144-123-03 AND 46) ("AGENCY LOTS"), BY THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") AND AUTHORIZING THE EXECUTIVE DIRECTOR OF THE AGENCY TO EXECUTE THE 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS-FOUR AGENCY LOTS), BY AND BETWEEN THE AGENCY, ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION AND INLAND EMPIRE CONCERNED AFRICAN AMERICAN CHURCHES - IVDA REDEVELOPMENT PROJECT AREA 3 4 5 6 7 8 9 10 11 WHEREAS, the Redevelopment Agency of the City of San Bernardino ("Agency") is a 12 public body, corporate and politic, exercising governmental functions and powers and organized and 13 existing under Chapter 2 of the Community Redevelopment Law of the State of California (Health 14 and Safety Code Section 33020, et seq.); and 15 WHEREAS, the City of San Bernardino ("City") has designated the Agency to implement 16 the requirements and obligations of Federal programs in the City; and 17 WHEREAS, the Mayor and Common Council (the "Council") has amended the 2005-2010 18 Consolidated Plan and the 2006-2007 Annual Action Plan to include the Five Hundred Ninety- 19 Three Thousand Two Hundred Dollars ($593,200) HOME Community Housing Development 20 Organization ("CHDO") Funds appropriation; and 21 WHEREAS, the Agency, in compliance with the Citizen Participation Plan and 24 CFR 22 570.302 and 24 CFR 91.105 has published in the San Bernardino County Sun newspaper on October 23 21 and November 13,2006, the required Public Notice amending the 2005-2010 Consolidated Plan 24 and 2006-2007 Annual Action Plan allocating Two Hundred Forty Thousand Dollars ($240,000) in 25 HOME Funds downpayment assistance and Three Hundred Fifty-Three Thousand Two Hundred 26 Dollars ($353,200) in Federal HOME CHDO and HOME Project Funds for the development of four 27 (4) single-family in-fill homes ("New Homes") and to provide downpayment assistance to low- 28 income households to purchase the homes ("Project"); and I 1':\Agelldas\RcsolUlions\Rcsolulions\2006\1 ]-20-{)6 Arroyo & Churches DDA CDC Heso Ildoc 1 WHEREAS, the Agency has certified the Developer as a CHDO, after providing 2 documentation meeting all the requirements of 24 CFR 92.300 and is eligible to receive HOME 3 Funds under the fifteen percent (15%) CHDO and federal requirement; and 4 WHEREAS, the Agency owns real properties located on 16th and Harris Streets (APN: 0144- 5 131-21) and, 17th and "J" Streets (APN: 0144-131-36, 0144-123-03 and 46) (the "Agency Lots") 6 which will be transferred and developed into the New Homes jointly by Arroyo Valley Community 7 Economic Development Corporation, a California non-profit benefit corporation ("Developer"), and 8 Inland Empire Concerned African American Churches, a California non-profit corporation 9 ("Participant"), per the 2006 Affordable Single-Family Disposition and Development Agreement 10 (HOME Funds-Four Agency Lots) (the "Agreement"); and 11 WHEREAS, the Agency seeks to transfer the Agency Lots to qualified homebuyers as 12 defined in the Agreement for the purpose of providing affordable housing consistent with the 13 provisions of the Redevelopment Plan for the IVDA Redevelopment Project Area and the Agency's 14 Housing Implementation Plan ("Plans"); and 15 WHEREAS, the Agency has prepared and published a public notice in the San Bernardino 16 County Sun newspaper on November 6, 2006 and November 13,2006, regarding the development 17 and disposition of the Agency Lots by the Developer and the Participant for sale to qualified 18 homebuyers; and 19 WHEREAS, pursuant to Health and Safety Code Section 33433(c), the Agency may transfer 20 the Agency Lots to the Developer and the Participant subject to the Mayor and Common Council 21 ("Council") and Community Development Commission ("Commission") of the City of San 22 Bernardino adopting a Resolution authorizing the Agency to transfer such Agency Lots in light of 23 the findings set forth herein; and 24 WHEREAS, the Project is exempt under the National Environmental Protection Act (NEP A) 25 per 24 CFR 58.35(a) and the California Environmental Quality Act (CEQA) pursuant to Section 26 15332, Class 32. 27 28 2 P:\A.gendas\Resolulions\Resolulions\2006\1 ]-20-06 Arroyo & Ch.urches DDA CDC Reso B.doc 1 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE 2 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS 3 FOLLOWS: 4 Section 1. On November 20, 2006, the Commission conducted a full and fair joint 5 public hearing with the Council relating to the disposition of the Agency Lots to the Developer and 6 the Participant for construction of the New Homes for sale to qualified homebuyers in order to 7 effectuate the provisions of the Agreement. The minutes of the City Clerk shall include a record of 8 all communication and testimony submitted to the Council and the Commission by interested 9 persons relating to the joint public hearing. 10 Section 2. The Commission hereby approves the Agreement and authorizes the 11 Executive Director of the Agency to execute the Agreement and to make changes to the Agreement 12 provided said changes are not substantive in nature and do not increase the Agency's financial 13 contribution to the Project, and as approved by Agency Counsel. 14 Section 3. The Commission hereby finds and determines that no further environmental 15 review of the disposition of the Agency Lots and the Project pursuant to the Agreement is necessary, 16 at this time, under CEQA and NEP A. The Resolution shall become effective immediately upon its adoption. 17 Section 4. 18 11/ 19 /11 20 11/ 21 11/ 22 11/ 23 11/ 24 /11 25 11/ 26 /11 27 11/ 28 11/ 3 P:\Agendas\Resolullons\Resolutions\2006\1 \.20.{)(i Arroyo & Churches DDA CDC Reso a,doe 1 2 3 4 5 6 7 8 9 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO APPROVING THE DISPOSITION OF CERTAIN PROPERTIES LOCATED IN THE CITY OF SAN BERNARDINO ON 16TH AND HARRIS STREETS (APN: 0144-131-21) AND 17TH AND "J" STREETS (APN: 0144-131-36, 0144-123-03 AND 46) ("AGENCY LOTS"), BY THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO ("AGENCY") AND AUTHORIZING THE EXECUTIVE DIRECTOR OF THE AGENCY TO EXECUTE THE 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS-FOUR AGENCY LOTS), BY AND BETWEEN THE AGENCY, ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION AND INLAND EMPIRE CONCERNED AFRICAN AMERICAN CHURCHES - IVDA REDEVELOPMENT PROJECT AREA I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community 10 Development Commission of the City of San Bernardino at a 11 thereof, held on the day of 12 Commission Members: Aves 13 ESTRADA 14 BAXTER 15 VACANT 16 DERRY 17 KELLEY 18 JOHNSON 19 MC CAMMACK 20 meeting , 2006, by the following vote to wit: Nays Abstain Absent Secretary 21 22 The foregoing resolution is hereby approved this day of ,2006. 23 24 25 26 Approved as to Form: 27 By: \;:~ .L A~;~ cD&~sel 28 Patrick J. Morris, Chairperson Community Development Commission of the City of San Bernardino 4 1':\Agendas\RcsolulionsIResulmiolls\2006\11-20-06 Arroyo & Churches DDA COC Rewll.doc 2006 AFFORDABLE SINGLE-F AMIL Y DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS - FOUR AGENCY LOTS) by and among Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic ("Agency") and Arroyo Valley Community Economic Development Corporation ("Developer"), a California non-profit benefit corporation and Inland Empire Concerned African American Churches ("Participant"), a California non-profit corporation Vacant Parcels (APN: 0144-131-21 and 36) Vacant Parcels (APN: 0144-123-03 and 46) 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS - FOUR AGENCY LOTS) THIS 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVE AGREEMENT (HOME FUNDS - FOUR AGENCY LOTS) (this "Agreement") is November 20, 2006, by and between the Redevelopment Agency of the City of San a public body, corporate and politic (the "Agency"), and Arroyo Valley Community Development Corporation (the "Developer"), a California non-profit benefit corporat approved Community Housing Development Organization CCHDO"), and the Inla Concerned African American Churches (the "Participant"), a California non-profit c The Agency, the Developer and the Participant are each sometimes referred to "party" and collectively are referred to herein as the "parties". This Agreement is e with respect to certain facts as presented in the following Recitals: - RECITALS-- (a) The Agency owns the four (4) vacant parcels ofland as listed below a specifically described in Exhibit "A", attached hereto and incorporated herein by ref' "Agency Lots"). AGENCY LOTS Vicinity and Condition of Agency Lot APN Number Approximate of Agency L 6,750 sq. ft 16th and Harris Streets, San Bernardino, CA (Vacant Lot) 17th and "J" Streets, San Bernardino, CA (Vacant Lot) 17th and "J" Streets, San Bernardino, CA (Vacant Lot) 17th and "J" Streets, San Bernardino, CA (Vacant Lot) 0144-131-21 0144-131-36 6,750 sq. f 0144-123-46 6,750 sq. f 0144-123-03 6,750 sq. ft The Agency, pursuant to the terms of this Agreement, plans to convey and simple title to the Agency Lots to the Developer and to the Participant as joint tenan the Developer and the Participant to construct the Project as described in Recital (b) b (b) The Developer and the Participant desire to construct homes with bedrooms, two (2) bathrooms which will be not less than approximately 1,300 square and a 400 square foot attached two (2) car garage single-family affordable housing u of the Agency Lots (the "Project"); and (c) [RESERVED - NO TEXT]; and .15 I LOPMENT dated as of Bernardino, Economic ion, and an nd Empire orporation. herein as a ntered into nd as more erence (the Size ot t t transfer fee ts to allow elow. three (3) feet in size nit on each (d) The Participant has obtained a loan from an institutional lender (which loan has been guaranteed by the Developer) the proceeds of said loan (together with the HOME funds to be provided to the Developer pursuant to this Agreement under Title 24 Code of Federal Regulations ("CFR") Part 92)) shall be used to permit the Developer and the Participant to construct, develop and implement the Project in accordance with the terms, covenants and conditions of this Agreement; and (e) The Agency, through the City of San Bernardino, receives annual federal funds under the Home Investment Partnership Act ("HOME Program"), from the United States Department of Housing and Urban Development ("HUD") in order to carry out eligible activities of the Agency in accordance with federal program regulations set forth in 24 CFR Part 92; and (f) In accordance with the HUD guidelines under the HOME Program, HOME funds may be used for locally based non-profit housing entities to carry out affordable housing activities in compliance with the HOME Program regulations; and (g) In accordance with the HOME Program requirements, not less than fifteen percent (15%) of HOME funds must be set aside for locally based non-profit entities known as Community Housing Development Organizations (and defined herein as a "CHDO") to carry out affordable housing opportunities for low-income households; and (h) The Agency has designated the Developer as a CHDO, as this term is defined in 24 CFR Part 92.300, and the Developer desires to participate with the Agency in activities that are eligible under the HOME Program, and the Developer further agrees that the beneficiaries of its activities under the HOME Program and this Agreement will be for the benefit of low income families and persons who meet the income eligibility guidelines of24 CFR Part 92.216 and Part 92.217; and (i) The Agency's participation in the Project is limited to the transfer of the Agency Lots to the Developer and to the Participant for the construction by the Developer and by the Participant offoUT (4) single-family New Homes (as defined below) to be sold by the Developer and by the Participant to Qualified Homebuyers; and (j) Each Qualified Homebuyer shall also covenant to the Agency that the New Home shall be used and occupied as the principal residence of the Qualified Homebuyer for forty-five (45) years following the date of initial occupancy of the New Home by the Qualified Homebuyer; and (k) Both the Developer and the Participant shall have the responsibility to inform a potential Qualified Homebuyer of the requirement that the Qualified Homebuyer shall be required to execute a recordable covenant restricting the use and occupancy of each "New Home" in accordance with the Agency program and the development goals and objectives, including, but not limited to, recital (j), above; and (I) Both the Developer and the Participant shall further have the responsibility for the marketing and the sale of each Completed New Home at a maximum purchase price for the .15 2 Completed New Home (including the applicable Agency Lot) that does not exceed ninety-five percent (95%) of the median purchase price for the areas as set forth at 24 CFR Part 92.254(a)(2)(iii); and (m) The Developer and the Participant are responsible for the construction of the Project at their sole expense and will pay for labor costs to construct the Project at the prevailing wage rates required by the applicable federal laws and/or applicable laws of the State of California, and the Agency is providing HOME funds to the Developer in its capacity as CHDO for the pre-construction costs for the development of housing units on the Agency Lots for sale to Qualified Homebuyers; and (n) The Agency is responsible for managing the day-to-day operations of its HOME Program including monitoring the performance of all entities receiving HOME funds from the Agency to ensure compliance with the requirements of 24 CFR Part 92, and for taking appropriate action when performance problems arise; and (0) The Developer has fully reviewed the CHDO requirements under the HOME Program and hereby certifies and warrants to the Agency that it has the qualifications and the ability to construct the Project in accordance therewith; and (P) The Developer and the Participant have entered into an agreement in which the Developer and the Participant shall develop the Agency Lots with the New Homes in the manner and pursuant to the other terms, covenants and conditions as more specifically set forth in said agreement as attached hereto as Exhibit "E"; and (q) The Agency has determined that development of the Project upon the Agency Lots pursuant to this Agreement and the additional financial incentives provided by this Agreement is vital and in its best interest of the City and the Agency. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES AND COVENANTS SET FORTH HEREIN, THE AGENCY, THE DEVELOPER AND THE PARTICIPANT HEREBY AGREE AS FOLLOWS: I. DEFINITIONS. In addition to the meaning ascribed to certain words and phrases as set forth in the Recitals of this Agreement, other words and phrases shall have the meaning described below: Additional Developer/Participant Downpayment Assistance. The term "Additional Developer/Participant Downpayment Assistance" shall mean those additional downpayment assistance loans made by the Developer and the Participant on a case-by-case basis, as necessary, to provide for the acquisition and funding of a New Home for purchase by a Qualified Homebuyer who has executed a promissory note and deed of trust in favor ofthe Developer and the Participant or their assigns as further provided in Section 5.6(b) hereof. Such deed of trust shall be subordinate to and in a second lien position to any Agency Downpayment Assistance for such New Home purchase. .15 3 Adjusted Family Income. The term "Adjusted Family Income" mean the anticipated total annual income (adjusted for family size) of each individual or family residing or treated as residing in the New Home as calculated in accordance with Treasury Regulation 1.167(k) - 3(b)(3) under the Code, as adjusted, based upon family size in accordance with the household income adjustment factors adjusted and amended from time to time, pursuant to Section 8 of the United States Housing Act of 1937, as amended. Agency Downpayment Assistance. The term "Agency Downpayment Assistance" shall mean and refer to the purchase money financial assistance, which the Agency may provide to Qualified Homebuyers of New Homes constructed on Agency Lots. The amount of such Agency Downpayment Assistance in favor of a particular Qualified Homebuyer to purchase a New Home shall not exceed Sixty Thousand Dollars ($60,000.00), and shall not exceed Two Hundred Forty Thousand Dollars ($240,000.00), in the aggregate, in connection with the purchase by each Qualified Homebuyer of the four (4) New Homes. Nothing contained herein shall preclude the Developer and/or the Participant from requesting of the Agency such additional dollar amounts of the Agency Downpayment Assistance on a case-by-case basis which additional amounts of assistance mayor may not be granted by the Agency at its sole discretion. Agency Grant Deed. The term "Agency Grant Deed" shall mean that certain grant deed by which the Agency shall convey and transfer Agency Lots to the Developer and to the Participant as joint tenants in substantially the form attached as Exhibit "C". Agency Lot. The term "Agency Lot" shall mean and refer to any parcel ofreal property which is both: (i) owned by the Agency as of the date of this Agreement, and (ii) made available for transfer to the Developer and to the Participant under the terms and conditions of this Agreement. Agency Regulatory Agreement. The term "Agency Regulatory Agreement" shall mean and refer to that certain regulatory agreement, declaration of covenants, conditions and restrictions (CC&Rs) affecting the Agency Lots and the Project by and among, the Agency, the Developer, the Participant and the Qualified Homebuyer in the form attached hereto as Exhibit "D" and recorded in the Official Records ofthe County Recorder's Office for the County of San Bernardino on the closing date of each New Home Escrow (as defined below). Certificate of Completion. The term "Certificate of Completion" shall mean that form attached hereto as Exhibit "F" and as further described in Section 4.6 hereof. City. The term "City" shall mean and refer to the City of San Bernardino, a charter city, having its offices at 300 North "D" Street, San Bernardino, California 924]8. Closing/Closing Date/Close of Escrow. The terms "Closing", "Closing Date" and "Close of Escrow" shall mean and refer to the date on which the conditions for the completion of the performance of the duties of the parties have been satisfied and the Agency Grant Deed conveying the Agency Lots to the Developer and to the Participant is recorded in the Office of the County Recorder of San Bernardino County, California. The Closing shall occur on or before the date provided in the Schedule of Performance attached hereto as Exhibit "B". .15 4 ,- Completed New Home. The term "Completed New Home" shall mean and refer to each new single-family residential unit to be designed, constructed and improved by the Developer and by the Participant on each Agency Lot. Each Completed New Home constructed on an Agency Lot shall be reserved and made available for sale to and occupancy by a Qualified Homebuyer designated by the Developer and by the Participant. Completed New Home Purchase Price. The term "Completed New Home Purchase Price" shall mean and refer to the applicable purchase price payable by the Qualified Homebuyer to the Developer and to the Participant for the purchase of each Completed New Home at the close of the applicable New Home Escrow. The Completed New Home Purchase Price for a New Home constructed on an Agency Lot shall be an amount which does not exceed a sum which is payable by the Qualified Homebuyer at the time of close of the New Home Escrow not to exceed ninety-five percent (95%) of the median purchase price for the County of San Bernardino as set forth at 24 CFR Part 92.254(a)(2)(iii). Completion of the Project. The term "Completion of the Project" shall mean and refer to the date that the Developer and the Participant have caused the last New Home to be sold to a Qualified Homebuyer. Delivery Date. The term "Delivery Date" shall mean and refer to the close of a New Home Escrow for a particular New Home following its completion, or in other words, on the Delivery Date, title and possession of a Completed New Home on an Agency Lot shall be delivered by the Developer and by the Participant to the Qualified Homebuyer at the close ofthe New Home Escrow. Effective Date. The term "Effective Date" shall mean and refer to the date on which this Agreement has been fully executed by the officers or representatives of the parties following an approving majority vote of the members of the governing board of the Agency authorizing the execution of this Agreement by the Agency and the conditions of Section 3.3(b) have been satisfied. Escrow. The term "Escrow" shall mean and refer to the land transfer and construction financing transaction account by and among the Agency, the Developer, the Participant and the escrow department of the Title Company for the transfer by the Agency of the title to the Agency Lots to the Developer and to the Participant on or before the date as provided in this Agreement. For the purpose of this Agreement, the parties thereto have designated the escrow department of the Title Company to serve as the "Escrow Agent". Hazardous Substances. The term "Hazardous Substances" shall mean and refer to (i) any hazardous or toxic substance or material including petroleum, petroleum-based products, asbestos and asbestos containing materials (ACM) and lead-based paint (LBP), or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government; and/or (ii) any substance or material identified by the United States Government, the State of California or any local governmental authority as hazardous or toxic and which is included on any list of such substances published by any such governmental entity. .15 5 Low-Income Household. The term "Low-Income Household" shall mean and refer to a Household which has the household income characteristics of a "low-income family" as set forth at 42 United States Code Section 1437a(b). New Home. The term "New Home" shall mean and refer to the affordable single-family residential dwelling unit (including the land and landscape improvements thereon) on an Agency Lot as acquired by the Qualified Homebuyer upon the close of the New Home Escrow. New Home Closing/New Home Closing Date/New Home Close of Escrow. The terms "New Home Closing", "New Home Closing Date" and "New Home Close of Escrow" shall mean and refer to the date on which the conditions for the completion of the performance by the Developer, the Participant and the Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the Successor-In-Interest) have been satisfied and a grant deed, the Agency Regulatory Agreement, the Agency Downpayment Assistance and the Additional DeveloperlParticipant Downpayment Assistance, if applicable, are recorded in the Office of the County Recorder of San Bernardino, California. New Home Escrow. The term "New Home Escrow" shall mean and refer to the real estate conveyance transaction or escrow by and between the Qualified Homebuyer and the seller of the New Home (or later, by and between the Qualified Homebuyer and the Successor-In- Interest). The transfer of the New Home to the Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the Successor-In-Interest) shall be accomplished upon the close of the New Home Escrow. New Home Sales Costs. The term "New Home Sales Costs" shall mean and refer to the actual and reasonable costs incurred by the Developer and by the Participant in the acquisition, development, improvement and sale to a Qualified Homebuyer, as enumerated below in subparagraphs (I) through (10), inclusive, of each Completed New Home on an Agency Lot. Within sixty (60) days following the close of each New Home Escrow for the sale by the Developer and by the Participant of a Completed New Home on an Agency Lot, the Developer and the Participant shall provide the Agency with a suitably detailed written accounting (e.g., in the form of the New Home Sale Costs Certificate) of the New Home Sale Costs for the particular Completed New Home. New Home Sale Costs for each Completed New Home include each of the following: (I) the actual and reasonable escrow and title insurance costs paid by the Developer and/or by the Participant for the purchase of the Agency Lot through the Escrow, if applicable; (2) the cost of preparing the Agency Lot for improvement, including demolition expenses, if any paid by the Developer and/or by the Participant, as applicable, grading, and all off-site costs incurred in connection with the improvement of the Agency Lot, including utility connection charges and adjacent public right-of-way improvements, if any; .15 6 (3) architectural, engineering, legal, accounting, consulting and other professional service fees paid in connection with the planning, execution and financing of the Project as allocated to the Agency Lot; (4) the cost allocated to the Agency Lot of insurance, construction lender financing charges, points and fees, construction loan interest, surety and completion bonds, property taxes, assessments as incurred and paid by the Developer and/or by the Participant between the time of the Closing for the Agency Lot to the Delivery Date for the Agency Lot; (5) the cost of construction materials, equipment and furnishings installed in the Completed New Home and the cost of labor to so construct and install the Completed New Home, and the cost of the Completed New Home on the Agency Lot, all building permits, public school fees, and other regulatory agency charges and the cost of landscaping and fencing as installed and constructed on the Completed New Home; (6) the cost allocated to the Agency Lot of construction supervision costs and private security patrol services incurred by the Developer and/or by the Participant in connection with the New Home; (7) New Home sales, marketing and commissions payable at the Delivery Date of the Completed New Home of six percent (6%) of the gross sales price of the Completed New Home on the Agency Lot; (8) New Home Escrow closing costs paid by the Developer and/or by the Participant at the Delivery Date for the Completed New Home; (9) a Developer and Participant overhead fee of five percent (5%) of the cost items under (2), (3), (5) and (6), above; (10) a Developer and Participant profit allowance of ten percent (10%) of the gross sales price of the Completed New Home on the Agency Lot; and (11) the amount of any Additional Developer/Participant Downpayment Assistance funded from the proceeds of the sale of a New Home or from other funds of, or otherwise available to, the Developer and/or the Participant. New Home Sale Costs Certificate. The term "New Home Sale Costs Certificate" shall mean and refer to the written accounting and cost certification prepared by the Developer and by the Participant, as applicable, and submitted to the Agency not later than sixty (60) days following the close of each New Home Escrow for a Completed New Home. Each New Home Sales Costs Certificate shall contain a suitably detailed description of the costs and expenses allocated to the Completed New Home. .15 7 Notice of Agency Concurrence. The term "Notice of Agency Concurrence" shall mean and refer to the acknowledgment executed by the Executive Director of the Agency and delivered to the holder of the New Home Escrow, in which the Agency confirms that the proposed Qualified Homebuyer, appears to satisfy all of the requirements of the Agency Regulatory Agreement for occupancy of the New Home. Project. The term "Project" shall mean and refer to all of the work of investigation, design, construction, improvement, modification, and financing necessary in order for the Developer and the Participant to acquire the Site from the Agency as joint tenants and for the Developer and the Participant to construct four (4) affordable single-family housing units as a project with each New Home consisting of not to exceed approximately 1,300 square foot homes with three (3) bedrooms, two (2) bathrooms and a 400 square feet attached two (2) car garage to be sold to income eligible households. The Project also includes all related landscaping, driveways, utilities and any improvements which may be required by the City within the public rights-of-way adjacent to the Site. This general description of the New Homes is that which the Developer and the Participant presently intend to construct upon the Agency Lots subject to the precise size and other design details being such as may be finally approved by the City through the site development approval process. The functional elements of the Project are more particularly described in the Scope of Development and Site Improvement Plan Concept in Section 4.1 (the "Scope of Development"). Qualified Homebuyer. The term "Qualified Homebuyer" shall mean and refer to low- and very low-income families and persons who meet the income eligibility guidelines of 24 CFR Part 92.216 and Part 92.217 whose income does not exceed 80% of the area median income as determined by the County of San Bernardino and adjusted for family size. Qualified Residence Period. The term "Qualified Residence Period" shall mean and refer to the period of time beginning on the Delivery Date and ending on a date which is forty- five (45) years after the Delivery Date. Redevelopment Plan. The term "Redevelopment Plan" shall mean and refer to the Redevelopment Plan for the Inland Valley Redevelopment Project Area. A copy of the Redevelopment Plan is on file in the Office of the City Clerk of the City. The Redevelopment Plan is incorporated herein by this reference as though fully set forth herein. Schedule of Performance. The term "Schedule of Performance" shall mean and refer to that certain Schedule attached hereto as Exhibit "B". Site. The term "Site" shall mean and refer to that certain unimproved real property located within the City of San Bernardino, County of San Bernardino, State of California, upon which the Project shall be constructed by the Developer and by the Participant consisting of the four (4) Agency Lots, more particularly described in the legal description attached to this Agreement as Exhibit "A". Successor-In-Interest. The term "Successor-In-Interest" shall mean and refer to the person, family or household who may acquire the New Home from the Qualified Homebuyer at .15 8 any time during the Qualified Residence Period by purchase, assignment, transfer or otherwise. The Successor-In-Interest shall be a "first-time homebuyer" and shall have an income level for the twelve (12) months prior to the date on which the Successor-In-Interest acquires the New Home which does not exceed the maximum Adjusted Family Income level for a Low-Income Household. Upon acquisition of the New Home the Successor-In-Interest shall be bound by each of the CC&Rs contained therein as a covenant. Title Company. The term "Title Company" shall mean as of the Effective Date of this Agreement, Orange Coast Title Company, San Bernardino Office, and thereafter any other title company mutually agreeable upon among the Agency, the Developer and the Participant. 2. PURPOSE OF AGREEMENT. The purpose of this Agreement is to effectuate the Redevelopment Plan by improving the Site as well as to assist in providing affordable housing which is reserved for sale and occupancy by Low-Income Households. The redevelopment of the Project on the Site and the fulfillment generally ofthis Agreement are in the best interests ofthe Agency, the City and the welfare of its residents and are in accordance with the public purposes and provisions of applicable federal, state and local laws and regulations under which the Project has been undertaken. 3. DISPOSITION OF AGENCY LOTS AND ESCROW. 3. I Transfer. Subject to the satisfaction of the terms and conditions of this Agreement, the Developer and the Participant shall accept from the Agency and the Agency agrees to transfer to the Developer and to the Participant as joint tenants, title to the Agency Lots on the terms hereinafter set forth. The Agency Lots shall be transferred to the Developer and to the Participant without any monetary consideration in exchange for the affordability covenant to be recorded on each Agency Lot in the manner and at the time required by this Agreement. The Developer and the Participant desire to acquire the Agency Lots for purposes of facilitating the construction of affordable housing units on the Agency Lots by the Developer and by the Participant. The Developer and the Participant shall cause each New Home Escrow to close with the Qualified Homebuyers with the various covenants and agreements as required by this Agreement to be recorded as to the affordable housing units as thus sold by the Developer and by the Participant. 3.2 Opening of Escrow. The Developer, the Participant and the Agency hereby agree to establish the Escrow for the transfer of the title to the Agency Lots to the Developer and to the Participant in the manner as provided herein. The Developer, the Participant and the Agency shall cause the Escrow to be opened within sixty (60) calendar days following the full execution of this Agreement and said Escrow shall Close not later than October 16, 2007, subject to the extensions of time and other requirements contained in Section 7.5 of this Agreement and Exhibit "B". This Agreement shall constitute the joint escrow instructions of the Agency, the Developer and the Participant, and a duplicate original of this Agreement shall be delivered to the Escrow Agent and the Escrow shall .15 9 be deemed to be opened when the Escrow Agent has received a fully executed copy of this Agreement and assigned its escrow account transaction identification to this Agreement. The Escrow Agent is empowered to act under these instructions. The Agency, the Developer and the Participant shall cooperate with the Escrow Agent and promptly prepare, execute, and deliver to the Escrow Agent such additional escrow instructions consistent with the terms herein as shall be reasonably necessary. No provision of any additional escrow instructions shall modify this Agreement and in the event of any conflict between the provisions of this Agreement and such additional escrow instructions, the provisions of this Agreement shall prevail. 3.3 Conditions to Closing. (a) The obligations of the Developer and the Participant to accept title to the Agency Lots and to Close the Escrow shall be contingent upon the satisfaction, or waiver by the Developer and the Participant, as applicable, of each and all of the following conditions (collectively, the "Acquisition Conditions") by the dates set forth herein: (i) The Agency has deposited into Escrow a certificate (the "FIRPT A Certificate") in such form as may be required by the Internal Revenue Service pursuant to Section 1445 of the Internal Revenue Code and a California Form 590-RE (Residency Certificate), pursuant to Section 18805 of the California Revenue and Taxation Code; (ii) The Agency has prepared and the Developer and the Participant have approved a legal description of the Agency Lots, which shall be attached to the Agency Grant Deed when delivered to the Escrow Agent; (iii) The Developer and the Participant have accepted the condition of the Agency Lots as provided in section 3.8; (iv) The Title Company has confirmed that it shall issue a CLTA Owner's policy of title insurance for the Agency Lots in a form acceptable to the Developer and to the Participant; (v) The Agency has executed and delivered to the Escrow Agent, in recordable form, the Agency Grant Deed and all other documents required under this Agreement in recordable form including the construction loan deed of trust as required by Section 3.3(b)(viii) below. Any waiver of the satisfaction of the foregoing conditions by the Developer and by the Participant must be expressed in writing. In the event that the foregoing conditions have not been satisfied within the time provided in the Schedule of Performance but not in all events by a date not later than thirty (30) calendar days after written request from the Developer and from the Participant, or in the event that the Agency may be in default, the Developer and/or the Participant may terminate this Agreement by delivering a written notice in accordance with Section 3.10, subject to any cure rights provided therein. From time-to-time, during the period when the Escrow is open, the Agency may send written notices to the Developer and to the Participant which reference this Section 3.3(a), and within ten (10) calendar days following the .15 10 receipt of such a notice the Developer and the Participant shall provide the Agency with a suitably detailed written report which describes the action, if any, which the Developer and the Participant believe may be necessary in order for any of the Acquisition Conditions to the Closing to be satisfied. (b) The obligation of the Agency to transfer the Agency Lots to the Developer and to the Participant and to Close the Escrow shall be contingent upon the satisfaction, or waiver by the Agency, of each of the following conditions (collectively, the "Agency Conditions") by the date set forth herein: (i) The Developer and the Participant have provided the Agency with the information set forth in Section 3.7, and development of the Project or otherwise provided the Agency with financial statements or loan commitments which evidence the Developer's and the Participant's capability to construct the Project and the ability of the Developer and of the Participant to accept title to the Agency Lots and for the Developer and for the Participant to develop the Project remain in full force and effect without material modification or change; (ii) The Developer and the Participant have delivered their written notice of acceptance of the condition of the Agency Lots to the Agency as provided in Section 3.8; (iii) The Developer and the Participant have not made or attempted to make a Transfer in violation of Section 4.3 and no default by the Developer and/or by the Participant exist under this Agreement; (iv) The Developer and the Participant have deposited into Escrow and executed, in recordable form, the certificate of acceptance of the Agency Grant Deed and the other documents required under this Agreement, and delivered to the Escrow Agent any other funds required to pay costs of the Developer and of the Participant to be paid at the time of Closing; (v) The Developer and the Participant have accepted the condition of the Agency Lots and shall have timely performed each and every other obligation of the Developer and of the Participant hereunder; (vi) The Developer and the Participant have submitted the final building plans for the Project for approval by the Agency as provided in Section 4. I below and the Agency has approved such final building plans; (vii) The Developer and the Participant have obtained all other necessary governmental approvals for the issuance of all permits and other entitlements for the construction of the Project, subject only to the submission of final plans and the payment of the applicable permit fees and public capital improvement charges, and such building permits as issued by the City for the construction of the four (4) New Homes shall be such as to allow for the commencement of construction immediately after the Close of Escrow; .15 II (viii) The Developer and the Participant shall have obtained a construction loan from a recognized lender reasonably acceptable to the Executive Director which construction loan deed of trust must be in a condition to record upon the Agency Lots immediately upon the transfer of title thereto from the Agency to the Developer and to the Participant upon the Close of Escrow. Any waiver of the satisfaction of the foregoing conditions by the Agency must be expressed in writing. In the event that the foregoing conditions have not been satisfied within the time provided in the Schedule of Performance, or in the event that the Developer and/or the Participant may be in default, the Agency may terminate this Agreement by delivering a written notice in accordance with Section 3.10, subject to any cure rights provided therein. From time- to-time, during the period when the Escrow is open, the Developer and/or the Participant may send written notices to the Agency which reference this Section 3.3 (b), and within ten (10) calendar days following the receipt of such notice the Agency shall provide the Developer and the Participant, as applicable, with a suitably detailed written report which describes the action, if any, which the Agency believes is necessary in order for any of the foregoing the Agency Conditions to the Closing to be satisfied. 3.4 Tax Reporting and Miscellaneous Matters. Prior to the Closing, the Developer, the Participant and the Agency shall execute and deliver a certificate (Taxpayer ID Certificate) in such form as may be required by the IRS pursuant to Section 6045 of the Internal Revenue Code, or the regulations issued pursuant thereto, certifying as to the description of the Agency Lots, date of Closing, gross price, if any, and taxpayer identification number for the Developer, the Participant and the Agency. Prior to the Closing, the Developer, the Participant and the Agency shall cause to be delivered to the Escrow Agent such other items, instruments and documents, and the parties shall take such further actions, as may be necessary or desirable in order to complete the Close of Escrow. 3.5 Escrow Procedures and Conveyance of the Agency Lots. (a) The Closing shall occur upon satisfaction of the Acquisition Conditions and the Agency Conditions as applicable; provided, however, in the event that the Closing has not occurred by a date not later than on or before October 16, 2007, subject to the provisions of Section 7.5 and Exhibit "B" Schedule of Performance, for any other reason, then after such date, any party who is not then in default may give its written notice of termination of the Escrow which references this Section 3.5(a), whereupon, this Agreement shall terminate and the Escrow shall be canceled. The Escrow Agent shall return any documents or funds then in its possession to the party who delivered such documents or funds, and the Developer and the Participant collectively shall pay one-half (1/2) of the Escrow Agent's reasonable cancellation charges, if any, and the Agency shall pay the other one-half (1/2) of such charges. Upon the payment of such Escrow cancellation charges the parties shall be mutually released from any further liability hereunder. The final date for the Closing may be extended by the mutual written agreement of the parties. .15 12 (b) Within ten (10) calendar days prior to the estimated time of the Closing, the Escrow Agent shall advise the Agency, the Developer and the Participant, in writing, of the approximate amount of the fees, charges, and other costs necessary to Close the Escrow, and of any documents which have not been provided by said party and which must be deposited in Escrow to permit Closing. ( c) On or before the third business day preceding the Closing Date, the Agency shall execute, acknowledge and deposit into Escrow (i) the Agency Grant Deed, and (ii) the FIRPTA Certificate. (d) On or before the Closing, the Developer and the Participant shall execute and acknowledge, as may be required, and deposit into Escrow (i) the acceptance of the Agency Grant Deed, and (ii) other security documents of a lender approved by the Agency pursuant to Section 3.7, if any. (e) Upon the completion by the Agency, the Developer and the Participant of the deliveries and actions specified in these escrow instructions the Escrow Agent shall be authorized to pay any documentary transfer taxes and recording fees, if required by law, and thereafter cause to be recorded in the appropriate records of San Bernardino County, California, the Agency Grant Deed and the other instruments delivered or exchanged by the parties through this Escrow. Concurrent with recordation, the Escrow Agent shall deliver the Title Policy to the Developer and to the Participant. Following recordation, the Escrow Agent shall deliver copies of said instruments to the Developer, the Participant and the Agency and provide the parties with copies of the final Escrow Closing statement. In addition, after deducting any sums specified in this Agreement, the Escrow Agent shall disburse funds to the party entitled thereto. 3.6 Title Matters. (a) At Closing, the Agency shall convey fee title to the Agency Lots to the Developer and to the Participant subject only to: (i) the use restriction as set forth in the Agency Grant Deed; (ii) the other CC&Rs set forth in the Agency Grant Deed; (iii) nondelinquent real property taxes and assessments; (iv) utility easements; (v) public street easements; (vi) applicable zoning and development regulation of the City as it affects Agency Lots, and (vii) CC&Rs, easements, and other encumbrances and title exceptions approved by the Developer and by the Participant (collectively, the "Permitted Exceptions"). (b) Within fifteen (15) calendar days after the Escrow is deemed opened, the Agency shall deliver to the Developer and to the Participant a preliminary title report for the Agency Lots issued by the Title Company, dated as of the opening of Escrow, together with copies of all title exception/matters referenced therein. Within thirty (30) calendar days following its receipt of the preliminary title report, the Developer and the Participant shall deliver to the Agency written notice specifying in detail any exception (other than those exceptions specifically listed in Section 3.6(a)) disapproved and the reason therefore. Within fifteen (15) calendar days following its receipt of such written notice from the Developer and from the Participant, the Agency shall deliver written notice to the Developer and to the Participant as to whether the Agency will or will not cause the disapproved exceptions to be removed or to be endorsed with .15 13 endorsements providing the Developer and the Participant with reasonable assurance with respect to the disapproved exceptions. If the Agency elects not to cure the disapproved exceptions, the Developer and the Participant, collectively and individually, may terminate this Agreement, without any liability of the Agency to the Deve]oper or to the Participant by giving notice which references this Section 3.6(b) and the parties shall be mutually released from any further duty or responsibility. ]f the Agency so elects to cure the disapproved exceptions, the Agency shall do so on or before the Closing. (c) Upon the Closing, the Title Company shall 'furnish the Developer and the Participant with a CL T A owner's policy of title insurance insuring the Deve]oper's and the Participant's fee interests in the Agency Lots subject only to the Permitted Exceptions (the 'Title Policy"). The Agency shall pay the premium charged by Title Company for the issuance of the Title Policy. The Developer and the Participant shall be responsible for obtaining and paying for the cost of any title policy insuring the interest of any interested person in the Agency Lots and/or the Project. 3.7 The Developer and the Participant Financing; Agency Grant to Developer and to Participant and Developer and/or Participant Covenants. (a) Within thirty (30) calendar days after the date of this Agreement, the Developer and the Participant shall submit to the Executive Director of the Agency, for approval, such evidence as may be reasonably satisfactory to the Executive Director of the Agency demonstrating that the Developer and the Participant have the financial capability necessary for the development of the Project pursuant to this Agreement. Such evidence of financial capability shall include all of the following: (i) Reliable cost estimates for the Developer's and the Participant's total cost of developing the Project (including both hard and soft costs); (ii) a financial statement and/or other documentation reasonably satisfactory to the Executive Director of the Agency sufficient to demonstrate that the Developer and the Participant have adequate funds available and committed to cover the development costs of the Project including any costs overruns that exceed the amount of the construction Joan financing to be provided to the Developer and to the Participant and the other HOME funds to be provided to the Developer pursuant to this Agreement; (iii) a copy of any other contracts with the general contractors of the Developer and of the Participant, if any, for all of the improvement of the Project certified by the Developer and by the Participant to be a true and correct copy thereof. The Executive Director of the Agency shall also have the right to review and approve any revisions that are made to the proposed contracts with the genera] contractors after its/their approval by the Executive Director ofthe Agency. (b) The Deve]oper and the Participant covenant and agree to take all action and shall furnish all information, give all consents and pay all sums required and comply with all conditions thereof, and shall promptly execute, acknowledge and deliver all applications, credit applications and data, financial statements and documents in connection therewith, for the costs ,15 ]4 of the Project which include, but are not limited to, architectural, engineering, legal, organizational, insurance, the other fees and overhead amounts and the cost of construction and marketing of the Project. (c) The Agency agrees to make available to the Developer an amount of HOME funds equal to $190,000.00 (the "HOME Funds Grant") which shall be used by the Developer for the payment of certain pre-development costs and expenses of the Project related to, and including, but not limited to, the costs of obtaining firm construction loan commitments, preparation and review of the architectural and engineering plans and specifications, zoning approvals, engineering studies, project management, payment of City and other governmental agency fees, including school fees, and the costs of permits, application costs and fees and City inspection fees, legal and accounting costs (collectively referred to herein as the "Qualified HOME Fund Expenditures"). Such HOME Funds Grant shall be payable to the Developer on an as-needed basis upon presentation to the Agency of an invoice from the Developer or from a third party consultant or contractor for a qualified expenditure item as permitted herein. In the event that the Qualified HOME Fund Expenditures do not equal the amount of the HOME Funds Grant that has been committed by the Agency because of cost savings in the dollar amounts of the Qualified HOME Fund Expenditures, the Agency shall not provide further advances to the Developer. (d) In consideration of the receipt of the HOME Funds Grant by the Developer in the manner as provided in (c) above, the Developer and the Participant agree to cause to be built in other locations within the City, not less than two (2) additional affordable housing units available to Low-Income Households (singularly, "Additional New Home" and collectively, "Additional New Homes") within twenty-four (24) months following the date of completion of the affordable housing units intended to be constructed on the Agency Lots. On the closing date of each escrow in connection with the purchase and sale of each Additional New Home, the Developer and the Participant shall cause a mutually executed and duly notarized Agency Regulatory Agreement to be recorded in the Official Records of the County Recorder's Office for the County of San Bernardino. Within ten (10) calendar days after such closing date for each Additional New Home, the Developer and the Participant shall provide written notice to the Agency describing the Additional New Home and submitting to the Agency (i) a copy of each Agency Regulatory Agreement utilized for each such Additional New Home, (ii) the income limits for which such purchaser of an Additional New Home has been qualified for purchase thereof, and (iii) the sales price ofthe Additional New Home. 3.8 Condition of the Agency Lots. (a) The Developer and the Participant shall have the right to approve the physical condition of the Agency Lots, including its soil and environmental condition, based upon the inspections to be conducted by the Developer and by the Participant of the Agency Lots and the records of the Agency. The Developer and the Participant shall, at their sole cost and expense, retain the consultant or consultants of its choice to assist the Developer and the Participant in their review of any and all aspects of the soils, environmental, geotechnical and other physical conditions of the Agency Lots, including all information, reports and records of the Agency pertaining to the physical condition of the Agency Lots. The Developer, the Participant and their .15 15 consultants shall also have the right to make any inspection of the Agency Lots and to conduct any intrusive soil sampling tests it deems appropriate with respect to either its geotechnical soils investigations or soils investigations relating to the potential presence of any Hazardous Substance on the Agency Lots. The Developer and the Participant shall notify the Agency at least seventy-two (72) hours in advance of any entry onto the Agency Lots pursuant to Section 3.8(c) and in the event the Developer, the Participant or their consultant desires to conduct tests involving the drilling, trenching or boring of the soils located on the Agency Lots, the consultant ofthe Developer and of the Participant shall work with and cooperate with the Agency to assure that all such tests are conducted in a manner consistent with the highest industry standards and in a manner that will not damage or injure the Agency Lots. Within the time provided in the Schedule of Performance, the Developer and the Participant shall conduct and complete their own independent inspection and investigation of the Agency Lots, and their investigation of all records and reports concerning the physical condition of the Agency Lots, determine ifthe soils, environmental, geotechnical and other physical conditions of the Agency Lots are suitable for the development and construction of the Project on the Agency Lots. The Developer and the Participant shall not rely on any statement or representation by the Agency or the City relating to the conditions of the Agency Lots. Without limiting the foregoing, the Agency makes no representation or warranty as to whether the Agency Lots presently complies with environmental laws or whether the Agency Lots contains any Hazardous Substance. By not later than the date indicated in the Schedule of Performance, the Developer and the Participant shall deliver a written notice to the Agency which references this Section 3.8 and includes a statement that either (i) the Developer and the Participant accept the condition of the Agency Lots in their "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS" conditions; or (ii) the Developer and the Participant disapprove the condition of the Agency Lots for the specific reason or reasons or grounds set forth in such notice. The Agency shall have no obligation or liability to the Developer and/or to the Participant to correct, cure, remedy or abate any soils, environmental, geotechnical or other physical condition of the Agency Lots, including, without limitation, the remediation of any Hazardous Substance thereon, which may provide the Developer and the Participant with a basis to disapprove the condition of the Agency Lots. If the Developer and/or the Participant notify the Agency in writing of the presence of any Hazardous Materials upon the Agency Lots, then this Agreement shall be subject to termination by any party without liability to the other parties upon the giving of notice of termination which references this Section 3.8, whereupon the parties shall be mutually released from all further responsibilities or liabilities. (b) Upon acquisition of title to the Agency Lots by the Developer and by the Participant, the Developer and the Participant shall take possession of the Agency Lots in their "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS" condition and the Developer and the Participant shall be responsible for any defects in the Agency Lots, whether patent or latent, including, without limitation, the physical, environmental and geotechnical condition of the Agency Lots, and the existence of any contamination, Hazardous Substances, vaults, debris, pipelines, abandoned wells or other structures located on, under or about the Agency Lots. The Agency makes no representation or warranty concerning the physical, environmental, geotechnical or other condition of the Agency Lots, the suitability of the Agency Lots for the Project, or the present use of the Agency Lots, and specifically disclaims all representations or warranties of any nature concerning the Agency Lots made by it, the City and their employees, agents and representatives. The foregoing disclaimer of the Agency includes, without limitation, .15 16 topography, climate, air, water rights, utilities, present and future zoning, soil, subsoil, existence of Hazardous Substances or similar substances, the purpose for which the Agency Lots is suited, or drainage. The Agency shall not be responsible for grading the Agency Lots and makes neither representation nor warranty concerning the compaction of soil upon the Agency Lots, nor of the suitability of the soil for construction. The Developer and the Participant have specifically reviewed and accepts the provisions of this Section 3.8(b), and the provisions of this Section 3.8(b) shall survive the Close of Escrow. Initials of the Developer Initials of the Participant (c) Prior to the date specified in the Schedule of Performance for the approval of the condition of the Agency Lots under Section 3.8 thereof, the Developer and the Participant, their employees, agents or contractors have the right, at the Developer's and/or the Participant's sole cost and expense, to enter onto the Agency Lots to conduct soils, engineering or other tests and studies, to perform preliminary work or for any other purposes to carry out the terms of this Agreement; provided, however, that no work of improvement of the Project shall commence until the Escrow has Closed and the Developer and the Participant have acquired the fee title interest in the Agency Lots from the Agency. The Developer and the Participant shall indemnify, defend and hold the Agency harmless from and against any claims, injuries or damages arising out of or involving any such entry or activity as provided in Sections 6.1 through 6.8. Any such activity shall be undertaken by the Developer and by the Participant only after securing any necessary permits from the appropriate governmental agencies and delivering to the Agency certificates of insurance evidencing the coverages required in Section 4.1 (y). 3.9 Cost of Escrow. (a) At Closing, the Escrow Agent is authorized to allocate certain Escrow costs as follows: the Agency shall pay (i) the documentary transfer tax; (ii) recording fees for the Agency Grant Deed; (iii) the premium for the Title Policy, and (iv) all of the customary service charges and expenses of the Escrow Agent. The Developer and the Participant shall pay (i) the recording charges for all financing documents and other matters and (ii) the price for any endorsements or binders to the Title Policy as the Developer and the Participant may in their discretion request. Each such party shall pay its own attorneys' fees. Any other usual and customary fees or costs which are not specifically allocated herein shall be paid by the Agency provided, however, that the parties who incur special messenger or overnight delivery charges shall be solely responsible for such expenses of the Escrow Agent. (b) Ad valorem taxes and assessments on the Agency Lots, if any, for the current year shall be prorated by the Escrow Agent as of the date of Closing, and the Agency shall be responsible for any such taxes or assessments levied, assessed or imposed prior to Closing, and the Developer and the Participant shall be responsible for those after Closing. If the actual taxes are not known at the date of Closing, the proration shall be based upon the most current tax figures. When the actual taxes for the year of Closing become known, the Developer, the .15 17 Participant and the Agency shall, within thirty (30) calendar days after written notice, prorate the taxes in cash between themselves outside of the Escrow. (c) In the event that a party who is not then in default may terminate this Agreement before the Closing, the Developer and the Participant collectively shall pay one-half and the Agency shall pay the other one-half (12) of the Escrow Agent's fees, charges, and expenses, including Title Policy cancellation charges, if any. In the event that a party who is not in default may terminate this Agreement as provided in Section 3.10, then the party who is in default shall be responsible for paying for all of the Escrow Agent's fees, charges, and expenses, including Title Policy cancellation charges, if any. 3.10 Cancellation of Escrow Prior to Closing upon Failure of Conditions without Fault by Any Party, Default and Termination. The Escrow may be canceled and this Agreement terminated prior to the Closing upon the written notice of any party who then shall have fully performed its obligations hereunder if: (i) either the Acquisition Conditions or the Agency Conditions have not occurred or have not been approved, disapproved, or waived as the case may be, by the approving party by the date established either in the Schedule of Performance or herein for the occurrence of such condition; or (ii) Escrow is not in a position to close by no later than on or before October 16,2007, for any reason, subject to the provisions of Section 7.5 and Exhibit "8" Schedule of Performance. In the event of the foregoing, the terminating party may demand, in writing, return of its money, papers or documents from the Escrow Agent and shall deliver a copy of such notice to the non- terminating party. Fifteen (\ 5) calendar days after such notice has been delivered to the Escrow Agent and the other party, this Agreement shall terminate and the Escrow Agent shall cancel the Escrow without further instruction, whereupon the parties shall be mutually released from any further obligation; provided, however, that the mutual representations of the parties under Section 3.12 and the indemnity provisions of Section 3.8(c), and Section 6.7 shall survive any such termination of this Agreement. 3.11 Responsibilities of Escrow Agent. (a) All funds received in Escrow shall be deposited by the Escrow Agent In an escrow account with any state or national bank doing business in the State of California. (b) All communications from the Escrow Agent shall be directed to the addresses and in the manner provided in Section 7.2 of this Agreement for notices, demands, and communications among the Agency, the Developer and the Participant. (c) The Escrow Agent is not to be concerned with the sufficiency, validity, correctness of form, or content of any document prepared outside of Escrow and delivered to Escrow. The sole duty of the Escrow Agent is to accept such documents and follow the written instructions from the Agency, the Developer and the Participant for their use. .15 18 (d) Upon the satisfaction of the Acquisition Conditions and the Agency Conditions, the Escrow Agent shall comply with the final written Escrow Closing instructions addressed to the Escrow Agent by the Developer, the Participant and by the Agency. (e) The Escrow Agent shall in no case or event be liable for the failure of any of the conditions to Closing, or for forgeries or false impersonation, unless such liability or damage is the result of negligence or willful misconduct by the Escrow Agent. 3.12 No Real Estate or Broker Commission Payable. The parties mutually represent and warrant that no real estate broker commission or finder's fee is payable to a third party in connection with the transfer of the Agency Lots by the Agency to the Developer and to the Participant. However, nothing contained herein shall preclude or limit the ability of the Developer and/or the Participant to pay normal and customary real estate broker fees and commissions to third party licensed real estate brokers upon the sale ofthe completed single-family homes on the Agency Lots to Qualified Homebuyers. 4. DEVELOPMENT OF THE PROJECT BY THE DEVELOPER AND BY THE PARTICIPANT. 4.1 Scope of Development. (a) Except for the work of technical investigation and testing of soils as authorized under Section 3.8, no other work of improvement of the Project shall be undertaken on the Agency Lots prior to the Closing between the Developer and the Participant as the purchaser and the Agency as the seller. It is the intent of the parties that promptly following the Close of the Escrow the Developer and the Participant shall commence the work of improvement of the Project on the Site. The Project consists of the elements set forth herein: I. General Proiect Description Each unimproved lot in the Site contains approximately 6,750 square feet each. The Project shall consist of the construction of not less than four (4) homes each of not less than approximately 1,300 square feet with three (3) bedrooms and two (2) bathrooms, and a 400 square foot attached two (2) car garage designated as affordable single-family housing units for low-income households as defined by federal law and regulations. II. Design Obiectives The following is a statement of design objectives for development of the Site: a. The creation and achievement of an attractive and pleasant environment reflecting a high level of concern for architectural and urban design principles both in terms of the development itself and its compatibility and suitability with the surrounding community and the provision of a pleasing, safe and well-maintained living environment, and vehicle parking in an urban environment. .15 19 III. Development Standards (a) The Project shall be designed and constructed in accordance with the approved terms and conditions of approval of the land use entitlements approved by the City of San Bernardino for this Project, if applicable. (b) The City's zoning ordinance and the City's building requirements will be applicable to the use of the Site and development of the Project. The Developer and the Participant acknowledge that the plans for development of the Site as set forth in the Scope of Development shall be subject to the City's zoning ordinance and building requirements. No action by the Agency or the City with reference to this Agreement or related documents shall be deemed to constitute a waiver of any City requirements which are applicable to the Site or to the Developer and/or to the Participant or to any Successor-In-Interest ofthe Developer and/or of the Participant except by modification or variance duly approved by the City in accordance with applicable law in its sole and absolute discretion. (c) The Scope of Development set forth above is hereby approved by the Agency upon its execution of this Agreement. The Project shall be developed and completed in conformance with the Scope of Development and any and all other plans, specifications, and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and between the Developer and the Participant and the Agency. The Executive Director of the Agency is authorized to approve the preliminary and the final construction plans for the Project, together with the preliminary and the final landscaping plans provided that the Executive Director of the Agency finds at the time of such approval that such plans are reasonably consistent with the Scope of Development. (d) The approval of the Scope of Development by the Agency shall not be binding upon the Mayor and Common Councilor the Planning Commission of the City with respect to any approvals of the Project required by such other bodies under applicable law. If any revision of the Scope of Development is required by another government official, the Agency, department or bureau having jurisdiction over the development of the Site and the Project as a result of development project permits, reviews and approvals under applicable law, the Developer and the Participant and the Agency shall cooperate in efforts to either modify the Scope of Development to accommodate such regulatory requirements or obtain waivers or recommendation of such revisions by the regulatory agencies. The Agency shall not unreasonably withhold approval of such revisions to the Scope of Development as may be required by such regulatory approval powers. (e) Notwithstanding any provision to the contrary in this Agreement, the Developer and the Participant agree to accept and comply fully with any and all conditions of approval applicable to all permits and other governmental actions affecting the development of the Site and the Project. No development of the Site and the Project shall occur except in conformity with all governmental approvals as may be granted with respect to such development. (I) The Developer and the Participant shall, at their sole cost and expense, cause landscaping plans in connection with development of the Project to be prepared and submitted to the City by a licensed landscape architect within the times provided in the Schedule of .15 20 Performance. The Developer and the Participant shall prepare and submit to the City for its approval, preliminary and landscaping plans for the Project which are consistent with City Code requirements. These plans shall be prepared, submitted, and approved within the times respectively established therefore in the Schedule of Performance as shown on Exhibit "8" and shall be consistent with the Scope of Development. (g) The Developer and the Participant shall, at their sole cost and expense, prepare and submit development plans, construction drawings and related documents within the times provided in the Schedule of Performance for the development of the Project. Such development plans, construction drawings and related documents shall be prepared and submitted in sufficient detail necessary to obtain all necessary building permits from the City for construction of the Project. The Agency shall cooperate with and shall assist the Developer and the Participant in order for the Developer and the Participant to obtain the approval of any and all development plans, construction drawings and related documents submitted by the Developer and by the Participant to the City consistent with this Agreement within sixty (60) calendar days following the City's receipt of said plans and as further specified in Section 7.5. Any failure by the City to approve any such plans or to issue necessary permits for the development of the Site within said sixty (60) calendar day period shall constitute a City caused delay hereunder, and the Schedule of Performance shall be extended by that period of time beyond said sixty (60) calendar day period in which the City approves said plans; provided, however, that in the event that the City disapproves of any such plans, the Developer and the Participant shall within sixty (60) calendar days after receipt of such disapproval revise and resubmit such plans in accordance with the City's requirements and in such form and substance so as to obtain the City's approval thereof all as further specified in Section 7.5 for City caused delays. If the City fails to approve or disapprove the plans within sixty (60) calendar days following submission, the plans are deemed approved for purposes of this Agreement only and not for compliance with City requirements for which the Developer and the Participant are otherwise required to comply. (h) During the preparation of all drawings and plans in connection with the development of the Project, the Developer and the Participant shall provide to the Agency regular progress reports to advise the Agency of the status of the preparation by the Developer and by the Participant, and the submission to and review by the City of construction plans and related documents. The Developer and the Participant shall communicate and consult with the Agency as frequently as is necessary to ensure that any such plans and related documents submitted by the Developer and by the Participant to the City are being processed in a timely fashion. (i) The Agency shall have the right of reasonable architectural review and approval of building exteriors and design of the structures to be constructed on the Site. The Agency shall also have the right to review all plans, drawings and related documents pertinent to the development of the Project in order to ensure that they are consistent with this Agreement and with the Scope of Development. U) The Developer and the Participant must carry out each activity in compliance with all Federal laws and regulations described in 24 CFR Part 92 and outlined hereinafter, except that the Developer and the Participant do not assume the Agency's responsibilities for environmental .15 21 review in 24 CFR Part 92.352 or the intergovernmental review process in 24 CFR Part 92.359. These Federal laws and regulations must be complied with as follows: (I) EqualOpportunitv. No person shall be excluded from participation in, be denied the benefits of or be subjected to discrimination under any program or activity funded in whole or in part with HOME funds. In addition, HOME funds must be made available in accordance with all laws and regulations listed in 24 CFR Part 92.350(a). (2) Fair Housing. In accordance with the certification made with its housing strategy, each participating jurisdiction receiving HOME Program funds, must affirmatively further fair housing. Actions described in Section 570.904(c) of Title II of the Cranston-Gonzalez National Affordable Housing Act will satisfy this requirement. (3) Affirmative Marketing. The Developer and the Participant must adopt affirmative marketing procedures and requirements for the Units. These must include: a. Methods for informing the public; b. Requirements and practices that the Developer and the Participant must adhere to in order to carry out the City of San Bernardino's affirmative marketing procedures and requirements; c. Procedures used by the Developer and by the Participant to inform and solicit applications from persons in the housing market area who are not likely to apply without special outreach; d. Records that will be kept describing actions taken by the Developer and by the Participant to affirmatively market units and records to assess the results of these actions; and e. A description of how the Developer and the Participant will assess the success of affirmative marketing actions and what corrective actions will be taken where affirmative marketing requirements are not met. (k) The Developer and the Participant shall commence the construction of the Project immediately on the business day next succeeding the date of the transfer of title of the Agency Lots from the Agency to the Developer and to the Participant after the Close of Escrow and the Developer and the Participant shall diligently pursue such construction through the completion thereof with no abandonment or cessation is construction activities. .15 22 (I) The Developer and the Participant must take all reasonable steps to ensure that all applicable disability accessibility requirements are met in the design and construction of the Project. To this end, the Project shall be designed and constructed in compliance with all disability accessibility requirements, including, but not limited to, Title II of the Americans with Disabilities Act, any regulations promulgated or disseminated by HUD relating to the accessibility of residential facilities for persons with disabilities, The Uniform Federal Accessibility Standards ("UFAS") and/or the Americans with Disabilities Act Accessibility Guidelines for Buildings and Facilities ("ADAAG"), Title 24 of the California Building Code ("CBC"), Section 504 of the Rehabilitation Act, 29 U.S.c. S 794,28 CFR 35.151, et seq. and 48 U.S.C 12101, et seq, to the extent applicable the Project. (m) The Developer and the Participant shall comply with all requirements set forth regarding conflict of interest provisions as they apply in 24 CFR Part 92.356. (n) As required in 24 CFR Part 92.357, the Developer and the Participant will comply with all debarment and suspension certifications. (0) Under the Flood Disaster Protection Act of 1973, HOME funds may not be used with respect to the acquisition or rehabilitation of a project located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, unless: (A) The community in which the area is situated is participating in the National Flood Insurance Program, or less than a year has passed since FEMA notification regarding such hazards. (B) Flood insurance is obtained as a condition of approval of the commitment. (C) The Agency is responsible for assuring that flood insurance under the National Flood Insurance Program is obtained and maintained. (P) Subject to the terms and conditions of this Agreement and as further set forth in Section 3.7(c) hereof, the Agency shall make available to the Developer from CHDO/HOME funds for the actual expenses as provided below, in a total amount not to exceed $190,000.00 which is considered here to be the HOME Funds Grant. The proceeds of the HOME Funds Grant shall be used and applied by the Developer to carry out the HOME Project as set forth in Section 3.7(c) of this Agreement. The Developer and Participant's expenses qualifying for payment or reimbursement pursuant to the HOME Funds Grant shall be evidenced by supporting documentation, setting forth the actual expenses of the Developer in relation to the authorized purposes set forth in this Section, and any costs in excess of the HOME Funds Grant amount of $163,200.00) shall be borne by the Developer. The Agency shall have the right, upon reasonable notice, to inspect and audit all books and records of the Developer pertaining to the use of the HOME Funds Grant. The HOME Funds Grant shall be disbursed by the Agency to the Developer as set forth in this Agreement. The Agency will submit the "Designation of Community Housing Development .15 23 Organization", Form HUD-40098, to reserve funds for use by the Developer promptly following the approval of this Agreement by the governing board of the Agency. (q) The Executive Director of the Agency shall approve any modified or revised plans, drawings and related documents to which reference is made in this Agreement within the times established in the Schedule of Performance as long as such plans, drawings and related documents are generally consistent with the Scope of Development and any other plans which have been approved by the Agency. Upon any disapproval of plans, drawings or related documents, the Executive Director of the Agency shall state, in writing, the reasons for such disapproval. The Developer and the Participant, as applicable, upon receipt of notice of any disapproval, shall promptly revise such disapproved portions of the plans, drawings or related documents in a manner that addresses the reasons for disapproval and reasonably meets the requirements of the Agency in order to obtain the Agency's approval thereof. The Developer and the Participant shall resubmit such revised plans, drawings and related documents to the Agency as soon as possible after its receipt of the notice of disapproval and, in any event, not later than thirty (30) calendar days thereafter. The Executive Director of the Agency shall approve or disapprove such revised plans, drawings and related documents in the same manner and within the same times as provided in this Section for approval or disapproval of plans, drawings and related documents initially submitted to the Agency. (r) If the Developer and the Participant desire to make any change in the construction drawings, plans and specifications and related documents after their approval by the Agency and/or the City, the Developer and the Participant shall submit the proposed change in writing to the Executive Director of the Agency and/or the City for their independent approval. The Executive Director of the Agency shall notify the Developer and the Participant of approval or disapproval thereof in writing within thirty (30) calendar days after submission to the Agency. This thirty (30) calendar day period may be extended by mutual consent of the Developer, the Participant and the Executive Director of the Agency. Any such change shall, in any event, be deemed to be approved by the Agency unless rejected, in whole or in part, by written notice thereof submitted by the Executive Director of the Agency to the Developer and to the Participant, setting forth in detail the reasons therefore, and such rejection shall be made within said thirty (30) calendar day period unless extended as permitted herein. The Agency shall use its best efforts to cause the City to review and approve or disapprove any such change as provided in Section 4.I(s) hereof. (s) The Developer and the Participant, upon receipt of a notice of disapproval by the Agency and/or the City, may revise such portions of the proposed change in construction drawings, plans and specifications and related documents as are rejected and shall thereafter resubmit such revisions to the Agency and/or the City for their independent approval in the manner provided in Section 4. I (g) hereof. (t) The Developer and the Participant shall have the right during the course of construction of the Project to make changes in construction of structures and "minor field changes" without seeking the approval of the Agency; provided, however, that such changes do not affect the type of use to be conducted within all or any portion of a structure. Said "minor field changes" shall be defined as those changes from the approved construction drawings, plans, and specifications which have no substantial effect on the improvements and are made in order .15 24 to expedite the work of construction in response to field conditions. Nothing contained in this Section shall be deemed to constitute a waiver of or change in the City's Building Code requirements governing such "minor field changes" or in any and all approvals by the City otherwise required for such "minor field changes". (u) The cost of designing, constructing, installing and equipping the Project, including the installation of all off-site public improvements, shall be borne by the Developer and by the Participant. (v) As a non-profit organization and a recipient of HOME funds, the Developer certifies and warrants that it meets the requirements of OMB Circular No. A-I22. The Agency shall monitor the activities of the Developer in order to ensure the continued compliance with these provisions and any other provisions applicable under the HOME Program. (w) The Developer and the Participant shall pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for utility improvements and connections, which may be required in developing the Project. The Developer and the Participant shall obtain any and all necessary approvals for utility services prior to the commencement of applicable portions of said construction, and the Developer and the Participant shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. (x) The Developer and the Participant shall commence the work of improvements of the Project on the Site within ninety (90) calendar days following the Close of Escrow for the Site, and thereafter shall diligently prosecute such construction to completion. All construction and development obligations and responsibilities of the Developer and of the Participant as related to the Project shall be initiated and completed within the times specified in the Schedule of Performance, or within such reasonable extensions of such times as may be granted by the Agency or as otherwise provided for in this Agreement. The Developer and the Participant shall substantially complete the improvement of the Project by the date set forth in the Schedule of Performance. During the course of the construction of the Project, the Schedule of Performance may be revised from time-to-time as mutually agreed upon. (y) Prior to the entry by the Developer and by the Participant to conduct limited testing on the Agency Lots pursuant to Section 3.8, and following the Closing before the commencement of any construction by the Developer and by the Participant of the Project, the Developer and the Participant shall procure and maintain, at their sole cost and expense, in a form and content satisfactory to the Agency, during the entire term of such entry or construction, the following policies of insurance: (i) a policy of comprehensive general liability insurance written on a per occurrence basis in an amount not less than either (i) a combined single limit of One Million Dollars ($1,000,000.00) or (ii) bodily injury limits of Five Hundred Thousand Dollars ($500,000.00) per person, One Million Dollars ($1,000,000.00) per occurrence, One Million Dollars ($1,000,000.00) products and completed operations and property .15 25 damage limits of Five Hundred Thousand Dollars ($500,000.00) per occurrence and Five Hundred Thousand Dollars ($500,000.00) in the aggregate. (ii) a policy of workers' compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for the Developer, the Participant ,the Agency and the City against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by the Developer and/or by the Participant in the course of carrying out the work or services contemplated in this Agreement. (iii) a policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than either (i) bodily injury liability limits of Two Hundred Fifty Thousand Dollars ($250,000.00) per person and Five Hundred Thousand Dollars ($500,000.00) per occurrence and property damage liability limits of One Hundred Thousand Dollars ($100,000.00) per occurrence and One Hundred Thousand Dollars ($100,000.00) in the aggregate or (ii) combined single limit liability of Five Hundred Thousand Dollars ($500,000.00). Said policy shall include coverage for owned, non-owned, leased and hired vehicles. (iv) during the course of construction and improvement of the Project, a policy of contractor'slbuilder's risk insurance covering the full replacement value of the Project. (v) upon written request from the Agency to the Developer and to the Participant, the Developer and the Participant shall immediately procure and maintain such other insurance policies, and in such coverage amounts, as is required by the Agency, from time to time. All of the above policies of insurance shall be primary insurance and shall name the City and the Agency, and their officers, employees, and agents as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against the City and the Agency and their officers, employees and agents and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or canceled without providing thirty (30) calendar days prior written notice by registered mail to the Agency. In the event any of said policies of insurance are canceled, the Developer and the Participant shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the Executive Director of the Agency. No work or improvement of the Site or operation of the Project shall commence until the Developer and the Participant have provided the Agency with certificates of insurance or appropriate insurance binders evidencing the above insurance coverages, and said certificates of insurance or binders are approved by the Agency. The policies of insurance required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated at least "A(vii)" or better in the most recent edition of Bests Insurance Rating Guide or an equivalent rating in The Key Rating Guide or in the Federal Register unless such requirements are modified or waived by the Executive Director of the Agency due to unique circumstances. .15 26 The Developer and the Participant shall provide in all contracts with contractors, subcontractors, architects and engineers (singularly, the "Subcontractor" and collectively, the "Subcontractors") who provide services in connection with the improvement of the Project that such persons shall maintain the same policies of insurance (the "Subcontractor Insurance Policy") required to be maintained by the Developer and by the Participant pursuant to this Section, unless waived by the Executive Director of the Agency. In connection with insurance required to be provided and maintained by a Subcontractor in connection with Section 4. I (a)(III)(y), the Agency shall accept the Subcontractor Insurance Policy provided and issued by the insurance carrier for such Subcontractor and will not require the Developer and/or the Participant to procure and maintain one (I) or more insurance policies and insurance coverage(s) for the services to be performed and/or goods to be delivered by one (I) or more Subcontractors in connection with the construction and development of the Project provided: (i) such Subcontractor Insurance Policy and insurance coverage at all times complies with the terms, covenants and conditions of this Section 4. I (a)(III)(y) of the Agreement; (ii) such Subcontractor Insurance Policy is procured and continuously maintained as required in this Section 4.1(a)(III)(y); (iii) the Agency is named as an additional insured on such Subcontractor Insurance Policy; (iv) such Subcontractor Insurance Policy is not terminated or cancelled by the insurance carrier (or if terminated or cancelled is replaced by a new Subcontractor Insurance Policy without any gap or breach in insurance coverage, and at all times provided and issued by an insurance carrier acceptable to the Agency in accordance with this Section 4. 1 (a)(III)(y)). Should any such Subcontractor Insurance Policy provided for by one (1) or more Subccontractors terminate, cancel or lapse prior to the term for which the Subcontractor must obtain and maintain such insurance policy in effect in accordance with this Section 4. I (a)(III)(y), the Developer and the Participant shall immediately procure, obtain and continuously maintain one (1) or more insurance policies as are required in this Section 4. I (a)(III)(y). Notwithstanding and provision to the contrary in this paragraph, the obligation of the Developer and the Participant to obtain and maintain one (1) or more insurance policies with the insurance coverage(s) and as otherwise provided for in this Section 4.I(a)(III)(y) shall not be waived, diminished or modified in any manner whatsoever. The Developer and the Participant agree that the provisions of this Section shall not be construed as limiting in any way the extent to which the Developer and/or the Participant may be held responsible for the payment of damages to any persons or property resulting from the activities of either the Developer and/or the Participant or the activities of any person or persons for which the Developer and/or the Participant is otherwise responsible. (z) RESERVED - NO TEXT (aa) The Developer and the Participant each for itself and their successors and assigns agrees that in the construction of the Project, the Developer and the Participant will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, creed, national origin or ancestry. (bb) The Developer and the Participant shall carry out their construction of the Project In conformity with all applicable federal and State of California laws, including, without .15 27 limitation, all applicable federal and/or state of California labor standards and requirements including, without limitation, the payment of prevailing wages as required by federal and/or State of California laws for the construction of the Project as a development on Agency acquired property in addition to the financing incentives as provided herein. (cc) The Developer and the Participant shall, at their own expense, secure or shall cause to be secured, any and all permits which may be required for such construction, development or work by the City or any other governmental agency having jurisdiction. The Agency shall cooperate in good faith with the Developer and with the Participant in the Developer's and Participant's efforts to obtain from the City or any other appropriate governmental agency any and all such permits applicable to the development of the Project. (dd) Officers, employees, agents or representatives of the Agency shall have the right of reasonable access to the Site, without the payment of charges or fees, during normal construction hours during the period of construction of the Project for the purpose of verifying compliance by the Developer and by the Participant with the terms of this Agreement. Such officers, employees, agents or representatives of the Agency shall be those persons who are so identified by the Executive Director of the Agency. Any and all officers, employees, agents or representatives of the Agency who enter the Site pursuant hereto shall identify themselves at the job site office upon their entrance onto the Site and shall at all times be accompanied by a representative of the Developer or of the Participant while on the Site; provided, however, that the Developer and the Participant shall make a representative of the Developer and of the Participant available for this purpose at all times during normal construction hours upon reasonable notice from the Agency. The Agency shall indemnify and hold the Developer and the Participant harmless from injury, property damage or liability arising out of the exercise by the Agency and/or the City of this right of access, other than injury, property damage or liability relating to the negligence of the Developer, the Participant or their officers, agents or employees. (ee) The Agency shall inspect relevant portions of the construction site prior to issuing any written statements reflecting adversely on the Developer's and/or the Participant's compliance with the terms and conditions of this Agreement pertaining to development of the Site. 4.2 Encumbrances and Liens. The Developer and the Participant shall not place and shall not allow to be placed on the Site any mortgage, trust deed, deed of trust, encumbrance or lien not otherwise authorized by this Agreement, and shall specifically pay materialmen and laborers in a timely manner so that no mechanics' liens or materialmens' liens are filed or recorded against the Agency Lots after title has been transferred to the Developer and to the Participant. The Developer and the Participant shall remove, or shall have removed, any levy or attachment made on the Site, or shall assure the satisfaction thereof. .15 28 4.3 Changes in Ownership Management and Control of the Developer and of the Participant -- Assignment and Transfer. (a) Transfer as used in this Section 4.3, the term "Transfer" means: (1) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, by the Developer and/or by the Participant of more than a forty-nine percent (49%) interest (or series of such sales, assignments and the like which in the aggregate exceed a disposition of more than a forty-nine percent (49%) interest) with respect to their interests in this Agreement, the Site or the Project, or any part thereof or any interest therein or of the improvements constructed thereon, or any contract or agreement to do any ofthe same; or (2) Any total or partial sale, assignment, conveyance, or transfer in any other mode or form, of or with respect to any ownership interest of the Developer and/or of the Participant, their nonprofit corporation business organization (or series of such sales, assignments and the like which in the aggregate exceeded a disposition of more than a forty-nine percent (49%) interest); or (3) Any merger, consolidation, sale or lease of all or substantially all of the assets of the Developer and/or of the Participant in this Agreement, the Site or the Project (or series of such sales, assignments and the like which in the aggregate exceeded a disposition of more than a forty-nine percent (49%) interest); or (4) The leasing of part or all of the Site or the Project except for the sale of the Project upon its completion by the Developer and by the Participant to Low-Income Households. (b) This Agreement is entered into solely for the purpose of the redevelopment of the Site and the improvement of the Project and the subsequent operation and use of the Site by the Developer and by the Participant for construction of the New Homes for sale and occupancy by Low-Income Households in accordance with the terms of this Agreement. The Developer and the Participant recognize that the qualifications and identity of the Developer and of the Participant are of particular concern to the Agency, in view of: (1) the importance of the redevelopment of the Site to the general welfare of the community; and (2) the fact that a Transfer is for all practical purposes a transfer or disposition of the responsibilities of the Developer and of the Participant with respect to the redevelopment of the Site and the Project. The Developer and the Participant further recognize and acknowledge that it is because of the qualifications and identity of the Developer and of the Participant that the Agency is entering into this Agreement with the Developer and with the Participant, and, as a consequence, Transfers are permitted only as provided in this Agreement. .15 29 (c) The limitations on a Transfer as set forth in this Section 4.3 shall apply until the Completion of the Project. Except as expressly permitted in this Agreement, the Developer and the Participant represent and agree that they have not made nor shall they create or suffer to be made or created, any Transfer, either voluntarily or by operation of law without the prior written approval of the Agency until after the Completion of the Project. Any Transfer made in contravention of this Section 4.3 shall be voidable at the election of the Agency and such action shall then be deemed to be a default under this Agreement. After the Completion of the Project, certain other provisions of this Agreement shall nonetheless be applicable to subsequent conveyances of interest in the Site, or portions thereof, as provided in the Agency Regulatory Agreement. (d) The following types of a Transfer shall be permitted and approved by the Agency and are referred to herein as a "Permitted Transfer": (I) Any Transfer by the Developer and/or by the Participant creating a "Security Financing Interest" in the Site which conforms to the provisions of Section 4.4; (2) Any Transfer directly resulting from the foreclosure of a Security Financing Interest created by the Developer and/or by the Participant in the Site or the granting of a deed in lieu of foreclosure of a Security Financing Interest; (3) Any Transfer of any interest in the Developer and/or in the Participant, irrespective of the percentage of ownership to any non-profit affiliate of or other non- profit entity controlled by the Developer and/or by the Participant, or to any other entity in which the Developer and/or the Participant own a controlling interest. (e) No Permitted Transfer of this Agreement or any interest in the Site or the Project, by the Developer or by the Participant (other than a Permitted Transfer created pursuant to a Security Financing Interest under Section 4.3(d)) shall be effective unless, at the time of the Permitted Transfer, the person or entity to which such Transfer is made, shall expressly assume the obligations of the Developer and of the Participant under this Agreement and such person also agrees to be subject to the conditions and restrictions to which the Developer and the Participant are subject under this Agreement. Such an assumption of obligation shall be evidenced by a written instrument delivered to the Agency in a recordable form which is satisfactory to the Agency. (f) Prior to, on and after the Completion of the Project, the covenants of the Developer and the Participant as set forth in the Agency Regulatory Agreement shall run with the land for the term as provided in the Agency Regulatory Agreement. (g) Following the issuance of a Certificate of Completion, the Developer and the Participant shall be released by the Agency from any liability under this Agreement which may arise from a default of a Successor-in-Interest occurring after the date of such a Transfer; provided, however, that the covenants of the Developer and of the Participant as set forth in the Agency Grant Deed and the Agency Regulatory Agreement shall run with the land for the term as provided in the Agency Grant Deed and the Agency Regulatory Agreement. .15 30 4.4 Security Financing; Right of Holders. (a) Notwithstanding any provision of Section 4.3 to the contrary, mortgages, deeds of trust or any other form of lien required for any reasonable method of financing the construction and improvement of the Project and any security interest or lien in the Site, are permitted before the Completion of the Project. The Developer and the Participant shall notify the Agency, in writing, in advance of any mortgage, deed of trust or other form of lien for financing if the Developer and the Participant propose to enter into the same before the Completion of the Project. The Developer and the Participant shall not enter into any such other conveyance for construction financing without the prior written approval of the Agency, which approval the Agency shall grant if, given to a responsible financial or lending institution including, without limitation, banks, savings and loan institutions, credit unions, insurance companies, real estate investment trusts, pension programs and the like, or other acceptable persons or entities for the purpose of constructing the Project on the Site. (b) The Developer and the Participant shall promptly notify the Agency of any mortgage, deed of trust or other refinancing, encumbrance or lien that has been created or attached thereto prior to completion of the construction of the improvements on the Site whether by voluntary act of the Developer or of the Participant or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic's liens need be given by the Developer and by the Participant to the Agency prior to suit being filed to foreclose such mechanic's lien. (c) The words "mortgage" and "deed of trust" as used herein shall be deemed to include all other customary and appropriate modes of financing real estate construction and land development. (d) The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shall in no manner be obligated by the provisions of this Agreement to construct or complete the improvement ofthe Site or to guarantee such construction or completion. (e) Whenever the Agency shall deliver any notice or demand to the Developer and/or to the Participant with respect to any breach or default by the Developer and/or by the Participant in the completion of construction of the Project, or any breach or default of any other obligations which, if not cured by the Developer and/or by the Participant, entitle the Agency to terminate this Agreement or exercise its right to re-enter the Agency Lots, or a portion thereof under the Agency Grant Deed, the Agency shall at the same time deliver to each holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, to commence the cure or remedy of any such default and to diligently and continuously proceed with such cure or remedy, within one hundred twenty (120) calendar days after the receipt of the notice; and to add the cost thereof to the security interest debt and the lien of its security interest. If such default shall be a default which can only be remedied or cured by such holder upon obtaining possession, such holder shall seek to obtain possession with diligence and continuity through a receiver or otherwise, and shall remedy or cure such default within one hundred twenty (120) calendar days after obtaining possession; .15 31 provided that in the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot be commenced, within such one hundred twenty (120) calendar day period, such holder shall have such additional time as is reasonably necessary to remedy or cure such default of the Developer and/or of the Participant. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Project (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed the obligations of the Developer and of the Participant, as applicable, by written agreement satisfactory to the Agency. The holder in that event must agree to complete, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates and must submit evidence satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. (f) In any case where one hundred eighty (180) calendar days after default by the Developer and/or by the Participant, the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the Site or any portion thereof has not exercised the option to construct the applicable portions of the Project, or has exercised the option but has not proceeded diligently and continuously with construction, the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer and/or by the Participant under the loan documents between the holder and the Developer, the Participant or any guaranty document executed by the Developer or the Participant. Ifthe ownership of the Agency Lots has vested in the holder, the Agency, may, at its option but not its obligation be entitled to a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: (1) The unpaid mortgage, deed of trust or other security interest debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer and/or by the Participant under the loan documents between the holder and the Developer and/or the Participant, at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings). (2) All expenses, if any, incurred by the holder with respect to foreclosure. (3) The net expenses, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent ownership or management of the Agency Lots, such as insurance premiums and real estate taxes. (4) The cost of any improvements made by such holder. (5) An amount equivalent to the interest that would have accrued on the aggregate on such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. .15 32 (6) After expiration of the aforesaid one hundred eighty (180) calendar day period, the holder of any mortgage, deed of trust or other security affected by the option created by this Section, may demand, in writing, that the Agency act pursuant to the option granted hereby. If the Agency fails to exercise the right herein granted within sixty (60) calendar days from the date of such written demand, the Agency shall be conclusively deemed to have waived such right of purchase of the mortgage, deed of trust or other security interest. (g) In the event of a default or breach by the Developer and/or by the Participant of a mortgage, deed of trust or other security interest with respect to the Agency Lots (or any portion thereof) prior to the Completion of the Project (or any portion thereof), and the holder has not exercised its option to complete the development, the Agency may cure the default but is under no obligation to do so prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer and from the Participant of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be deemed to have a lien of the Agency as may arise under this Section 4.4(g) upon the Agency Lots or the Site (or any portion thereof) to the extent of such costs and disbursements; provided, however, any such lien in favor of the Agency as may arise under this Section 4.4(g) shall be subordinate and subject to mortgages, deeds of trust or other security instruments executed by the Developer and/or by the Participant for the purpose of obtaining the funds to construct and improve the Site as authorized herein. 4.5 Right of the Agency to Satisfy Other Liens on the Agency Lots after Conveyance of Title to the Developer and to the Participant. After the conveyance of title to the Agency Lots by the Agency to the Developer and to the Participant and prior to the Completion of the Project, and after the Developer and the Participant have had a reasonable time to challenge, cure or satisfy any unauthorized liens or encumbrances on the Agency Lots, the Agency shall after one hundred twenty (120) calendar days prior written notice to the Developer and to the Participant have the right, but not the obligation, to satisfy any such liens or encumbrances; provided, however, that nothing in this Agreement shall require the Developer and/or the Participant to payor make provisions for the payment of any tax, assessment, lien or charge so long as the Developer and the Participant in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Site, or any portion thereof, to forfeiture or sale. 4.6 Certificate of Completion. (a) Following the written request therefore by the Developer and by the Participant for the issuance by the Agency of the Certificate of Completion upon the completion of the construction and sale of the four (4) New Homes by the Developer and by the Participant upon the Agency Lots, the Agency shall furnish to the Developer and to the Participant a Certificate of Completion for the Agency Lots and the New Homes substantially in the form as set forth in Exhibit "F". .15 33 (b) The Agency shall not unreasonably withhold the issuance of the Certificate of Completion. The Certificate of Completion shall be, and shall so state, that it is a conclusive determination of satisfactory completion of all of the work of improvement of the Project and the sale of the New Homes in the manner as required by this Agreement. After the recordation of the Certificate of Completion, any person then owning or thereafter purchasing; leasing or otherwise acquiring any interest in the Agency Lots and the New Homes shall not (because of such ownership, purchase, lease or acquisition) incur any obligations or liability under this Agreement, except that such person shall be bound by any covenants contained in the Agency Grant Deed, the Agency Regulatory Agreement and any Agency Downpayment Assistance. (c) Any Certificate of Completion shall be in such form as to permit it to be recorded in the Recorder's Office of San Bernardino County wherein the Agency Lots are located. (d) Ifthe Agency refuses or fails to furnish the Certificate of Completion after written request from the Developer and from the Participant to the Agency, the Agency shall, within fifteen (15) calendar days after receipt of the written request or within three (3) business days after the next regular meeting of the governing body of the Agency, whichever date is the later to occur, provide to the Developer and to the Participant a written statement setting forth the reasons with respect to the Agency's refusal or failure to furnish the requested Certificate of Completion. The statement shall so contain the Agency's opinion of the actions that the Developer and the Participant must undertake to obtain the requested Certificate of Completion. If the reason for such refusal is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer and to the Participant or other minor building "punch-list" items, the Agency may issue its Certificate of Completion upon the posting of a bond, cash or irrevocable letter of credit, reasonably approved as to form and substance by the Agency General Counsel, and obtained by the Developer and/or by the Participant in an amount representing the fair value of the work not yet completed as reasonably determined by the Agency. For the purposes of the preceding sentence, the words "minor building punch-list item" refers to Project construction items which do not in the aggregate exceed a total cost of ten percent (10%) of the amount of the approved construction budget for the New Homes. If the Agency shall have failed to provide such written statement within the foregoing period of time, the Developer and the Participant shall be deemed conclusively and without further action of the Agency to have satisfied the requirements of this Agreement with respect to the Agency Lots and the New Homes the same as if a Certificate of Completion had been issued therefore. 4.7 [RESERVED -- NO TEXT] 5. USE OF THE SITE. 5.1 Use of the Agency Lots. The Developer and the Participant hereby covenant and agree, each for itself and their successors and assigns, that the Agency Lots shall be developed, used and maintained as single- family housing units for occupancy by Low-Income Households in the manner and for the period of time as more fully set forth in the Agency Grant Deed (Exhibit "C") and the Agency Regulatory Agreement (Exhibit "D" herein). As further set forth in the Recitals to this .15 34 Agreement relating to the use of HOME funds pursuant to the various federal statutes and regulations set forth therein, the maximum purchase price of any New Home to be paid by a Qualified Homebuyer that is constructed on the Agency Lots or the Site shall not exceed ninety- five percent (95%) of the area median purchase price for comparable sales as determined by the Agency from time-to-time based upon County of San Bernardino statistical data. 5.2 Disposition of the Agency Lots to Qualified Homebuyers. (a) Upon the completion of each New Home by the Developer and by the Participant on each Agency Lot, the Developer and the Participant shall transfer and sell all of its rights, title and interest in the Agency Lots, as improved with the Completed New Home to a Qualified Homebuyer designated by the Developer and by the Participant. The Completed New Home Purchase Price payable by such Qualified Homebuyer to the Developer and to the Participant for the Completed New Home shall be an amount as referenced in Section 5.1. (b) The disposition of each Completed New Home to the Qualified Homebuyer designated by the Developer and by the Participant shall take place through a New Home Escrow to be administered by the Escrow Holder. The Escrow Holder shall promptly confirm to the parties the escrow number and the title insurance order number assigned to such escrow. The Escrow Holder shall be a title company or escrow service as acceptable to the Developer, the Participant and the Qualified Homebuyer. (c) The Developer and the Participant shall deliver to the Agency the information relating to each Qualified Homebuyer described in Section 2( d) of the Agency Regulatory Agreement, within five (5) calendar days following the designation by the Developer and by the Participant of such Qualified Homebuyer as the prospective purchaser of the Completed New Home. Concurrently, upon the delivery by the Developer and by the Participant to the Agency of the household income and occupancy information described in Section 2( d) of the Agency Regulatory Agreement, the Developer and the Participant shall also request that the Agency issue its Notice of Agency Concurrence with respect to the Qualified Homebuyer designated by the Developer and by the Participant. Within ten (10) calendar days following its receipt of such written information and request from the Developer and from the Participant relating to the Qualified Homebuyer, the Agency shall provide the Developer and the Participant with a preliminary confirmation of the approval or rejection of the income and household occupancy qualifications of the proposed Qualified Homebuyer. In the event that the Agency may request additional information relating to the confirmation of the matters described in the preceding sentence with respect to the Qualified Homebuyer, the Developer and the Participant shall cause such additional information to be provided to the Agency as promptly as feasible. The Executive Director of the Agency shall issue a preliminary determination of his concurrence of the eligibility of the Qualified Homebuyer within ten (10) calendar days following receipt of such completed income and household occupancy information. Provided that the proposed Qualified Homebuyer also qualifies to obtain purchase money mortgage financing for the purchase of the Completed New Home with terms and costs not in excess of that amount as required for such Qualified Homebuyer, as evidenced by a written mortgage lender's prequalification for such Qualified Homebuyer within sixty (60) calendar days following the Executive Director of the Agency's preliminary concurrence of the eligibility of the Qualified Homebuyer designated by the Developer and the Participant, the Executive Director of the Agency shall issue a Notice of .15 35 Agency Concurrence with respect to such Qualified Homebuyer to the Escrow Holder. In the event that the Agency may later discover that the written information provided to it in support of a request for issuance of a Notice of Agency Concurrence is false or incorrect in any material respect, then in such event the Agency may exercise all of its remedies to enforce the provisions of this Agreement and the Agency Regulatory Agreement, if applicable, notwithstanding the fact that a Notice of Agency Concurrence may have been issued in favor of a particular Qualified Homebuyer. Upon the completion of each New Home, the Developer and the Participant shall sell such New Home to a Qualified Homebuyer which New Home shall be transferred to such Qualified Homebuyer through a New Home Escrow. The Agency shall not be a party to any such New Home Escrow. Notwithstanding the preceding sentence, the Developer and the Participant shall instruct the Escrow Holder to comply with the provisions of Section 5.2(e) of this Agreement and at the close of each New Home Escrow, the Escrow Holder shall provide the Agency with a copy of both the "seller's" and the "buyer's" closing statement, together with a complete copy of the real estate sales agreement between the Developer and the Participant with the Qualified Homebuyer for the New Home. (d) The Developer, the Participant and the Agency mutually covenant and agree to execute all necessary or appropriate written escrow instructions relating to the application of this Agreement to a particular New Home Escrow as may be reasonably requested by the Escrow Holder in connection with the administration of a New Home Escrow. (e) Each New Home Escrow shall close upon satisfaction of the applicable escrow conditions by and between the Developer and the Participant as the seller and such Qualified Homebuyer as the buyer as consistent with this Agreement when the Escrow Holder confirms that: (i) it is in receipt of the Notice of Agency Concurrence for the Qualified Homebuyer in the case of the Completed New Home; (ii) it has received and is in a position to record a fully executed form of the Agency Regulatory Agreement for the Completed New Home; (iii) it is in a position to provide the Agency within a policy of title insurance in favor of the Agency which insures that the Agency Regulatory Agreement is subject only to the lien for property taxes and the lien in the Completed New Home of the senior purchase money mortgage lender to the Qualified Homebuyer in the case of the Completed New Home; (iv) the Developer and the Participant have provided the Agency with a preliminary indication of the Completed New Home; (v) the Qualified Homebuyer has executed all of the Agency documents relating to the Agency Downpayment Assistance, if any, provided by the Agency to such Qualified Homebuyer pursuant to Section 5.5 of this Agreement; .15 36 (vi) it is in receipt of a grant deed (the "New Home Grant Deed") executed and acknowledged by the Developer and by the Participant, and executed, acknowledged and accepted by the Qualified Homebuyer, wherein the Developer and the Participant sell, transfer, convey, grant and assign all of their rights, title and interest in the Completed New Home to the Qualified Homebuyer, and the Qualified Homebuyer accepts the New Home Grant Deed; (vii) it is in a position to record the Additional Developer/Participant Downpayment Assistance documentation, if applicable; (viii) it is in a position to comply with such other instructions of the Developer, the Participant, the Qualified Homebuyer and the senior purchase money mortgage lender relating to the Completed New Home. (f) In the event that a New Home Escrow may fail to close for any reason, the Developer and the Participant may cause such New Home Escrow to be cancelled without further notice of instruction to the Agency. The Developer and the Participant shall pay for all of the costs and expenses of such a cancelled New Home Escrow and shall indemnify, defend and hold the Agency harmless from any claim, loss or damage which may be asserted or arise against the Agency by a third party as a result of the cancellation of any such escrow. (g) Within sixty (60) calendar days following the close of a New Home Escrow, the Developer and the Participant shall deliver its New Home Sales Costs Certificate to the Agency, together with adjustments, if any. 5.3. Maintenance of the Agency Lots. The Developer and the Participant covenant and agree each for itself, their successors, and assigns to maintain each of the Agency Lots in a good condition free from any accumulation of debris or waste material, subject to normal construction job-site conditions, and shall maintain in a neat, order! y, healthy and good condition the landscaping on each Agency Lot required to be planted in accordance with the Scope of Development. In the event the Developer, the Participant, or their successors or assigns, fails to perform the maintenance as required herein, the Agency shall have the right, but not the obligation, to enter any Agency Lot and undertake such maintenance activities. In such event, the Developer and the Participant shall reimburse the Agency for all reasonable sums incurred by it for such maintenance activities. The obligation of the Developer and of the Participant under this Section 5.3 with respect to the Agency Lots shall be discharged for each Agency Lot on the applicable Delivery Date for each Completed New Home. 5.4 Project Development Cost Pro Forma. (a) As of the Effective Date of this Agreement, the Developer and the Participant have presented the Agency with a Project development cost pro forma (the "Pro Forma"). The Pro Forma as submitted to the Agency sets forth the line item expenditures anticipated to be paid .15 37 and incurred by the Developer and the Participant in development of the New Homes. As set forth in the Pro Forma, all fees payable to the Developer, the project manager, the construction manager and the builder of the New Homes shall not exceed the dollar amounts set forth in the Pro Forma and shall be payable solely from (i) the amounts as available but not to exceed the line item budget dollar figure for each such item and (ii) the unexpended contingency amount reasonably anticipated by the Developer as necessary for the development of the New Homes. All fees and reimbursements payable to the Developer, the project manager, the construction manager and the builder shall at all times be subordinate to the payment of the direct construction costs and the indirect costs as noted in the Pro Forma as so noted in the Pro Forma. (b) Upon the request of the Agency (but not more frequently than once every ninety (90) calendar days) and at such other times as the Developer and the Participant may in their discretion elect, the Developer and the Participant shall modify or update the previously submitted Pro Forma. Upon the written request by the Agency, the Developer and the Participant shall deliver to the Agency the updated and revised Pro Forma within ten (10) calendar days from receipt by the Developer and by the Participant of such written Agency request. (c) The Developer and the Participant shall maintain accounting books and records of Project development costs incurred in accordance with generally accepted principles of business accounting. The Agency and its accountants and auditors shall have the right to conduct, at its expense, an inspection and review of the accounting books and records of the Developer and of the Participant relating to the Project, upon the written request of the Agency which shall be given to the Developer and to the Participant with not less than seventy-two (72) hours' prior written notice. The Developer and the Participant shall cooperate with the Agency in the production of its accounting books and records as reasonably required by the Agency and its auditors to conduct an audit of actual Project development costs. 5.5 Agency Downpayment Assistance. (a) As of the Effective Date of this Agreement, the Agency shall appropriate and reserve the sum of Two Hundred Forty Thousand Dollars ($240,000.00), in the aggregate, from the HOME Fund to provide Agency Downpayment Assistance to Qualified Homebuyers of each of the four (4) Completed New Homes. Agency Downpayment Assistance may hereafter be provided to Qualified Homebuyers upon the close of each New Home Escrow for a Completed New Home, subject to the terms and conditions of the Agency's HAP Program and the underwriting and credit evaluation by the Agency of each such Qualified Homebuyer. (b) Provided that a Qualified Homebuyer is determined by the Agency to be eligible for Agency Downpayment Assistance, as part of its acquisition of a Completed New Home upon the close of the New Home Escrow, such Qualified Homebuyer shall execute and/or acknowledge such instruments, documents and agreements, as reasonably requested by the Agency. (c) The amount, if any, of the Agency Downpayment Assistance, which may be provided to one (I) or more Qualified Homebuyers shall not exceed more than Sixty Thousand .15 38 Dollars ($60,000.00) in connection with the sale by the Developer and by the Participant to the Qualified Homebuyer and the purchase by the Qualified Homebuyer from the Developer and from the Participant of the Completed New Home, and shall be disbursed for the account of such Qualified Homebuyer through the applicable New Home Escrow for each Completed New Home. (d) In the event a Qualified Homebuyer shall need additional downpayment assistance in the form of the Additional Developer/Participant Downpayment Assistance to purchase the Completed New Home upon the close of the New Home Escrow should the Agency Downpayment Assistance and the outstanding principal amount of the primary mortgage loan (the "First Deed of Trust Loan") to be made by a lender to the Qualified Buyer and secured by a first deed of trust or mortgage encumbering the Completed New Home, in the aggregate, be insufficient to permit the Qualified Homebuyer to purchase the Completed New Home upon the close of the New Home Escrow, the Developer and the Participant shall pay, assume, guarantee, or be responsible for the payment of, or otherwise provide for the funding of the Additional Developer/Participant Downpayment Assistance (for the benefit of the Qualified Homebuyer) needed by such Qualified Homebuyer to purchase such Completed New Home and to close the New Home Escrow for such Completed New Home. (e) Notwithstanding any other provision of this Section 5.5, the Agency shall have no obligation to grant or to fund any amount other than the Agency Downpayment Assistance grant or loan to a Qualified Homebuyer in connection with the purchase by the Qualified Homebuyer ofa Completed New Home. 5.6 Participation in New Home Profit for Each New Home. (a) For the purposes of this Section 5.6, the words "New Home Profit" for each New . Home shall mean and refer to a sum which shall be determined in accordance with the following formula: (Completed New Home Purchase Price) - (New Home Sales Costs) = New Home Profit (b) Within five (5) calendar days prior to the New Home Closing for each Completed New Home sold by the Developer and by the Participant to the Qualified Homebuyer, the Developer and the Participant shall prepare and provide to the Agency and to the Escrow Agent for the New Home Escrow a certificate estimating the New Home Profit for the Completed New Home being sold by the Developer and by the Participant to the Qualified Homebuyer. In connection with each New Home Escrow, should a Qualified Homebuyer need the Additional Downpayment Assistance to purchase the Completed New Home (in excess of the Agency's Downpayment Assistance being paid by the Agency for the benefit of the Qualified Homebuyer to the Escrow Agent ofthe New Escrow and ofthe proceeds from the First Deed of Trust Loan), such excess shall be paid by the Developer and by the Participant from the New Home Profit (in effect and earned by the Developer and by the Participant on the close of such New Home Escrow) in connection with such Completed New Home. As may be required on a case-by-case basis to provide for the funding of the purchase of New Home by a Qualified Homebuyer, the Developer and the Participant may provide for Additional Developer/Participant Downpayment Assistance to such Qualified Homebuyer to be funded either in whole or in part from the .15 39 proceeds that otherwise would have been payable to the Developer and to the Participant as the New Home Profit. At the close of the New Home Escrow, the Escrow Agent for the New Home Escrow shall pay fifty percent (50%) of the New Home Profit less the Additional Developer/Participant Downpayment Assistance, if any (the "Restated New Home Profit"), to the Developer and fifty percent (50%) of the Restated New Home Profit to the Participant. (c) Within sixty (60) calendar days following the close of a New Home Escrow, the Developer and the Participant shall also prepare and deliver to the Agency its New Home Sales Costs Certificate for such Completed New Home. Notwithstanding any other provision in this Agreement to the contrary, the Agency, at any time, shall have the right to conduct and complete an audit (the "Audit") of the information presented in each New Home Sales Costs Certificate, the books and records of the Developer and of the Participant in connection with and relating to the acquisition of each Agency Lot, the development, construction and improvement of each Completed New Home, the marketing and sale of each Completed New Home by the Developer and by the Participant to a Qualified Homebuyer, and all other financial information, New Home Sales Costs projections, Developer and Participant profit projections in connection with the sale by the Developer and by the Participant to a Qualified Homebuyer of each of the Completed New Homes, and any other financial information or other information relating to or in connection with the Project, at the expense of the Agency in accordance with generally accepted accounting principles. The Developer and the Participant shall cooperate with the Agency and its agents in the conduct of any such audit, including, without limitation, the delivery to the Agency, upon request, of underlying construction or service contracts and invoices for services performed or products delivered to the Developer and/or to the Participant by third parties relating to the Project. 6. ENFORCEMENT. 6.1 General Conditions (a) In the event that either the Acquisition Conditions or the Agency Conditions have not been approved, disapproved or waived by the parties, as the case may be, prior to the Closing by the applicable date set forth in the Schedule of Performance, then the remedies of the parties shall be as set forth in Section 3.10 of this Agreement which may result in a termination of this Agreement pursuant to Section 3.10 therein. In the event that a breach or default may occur prior to the Close of Escrow pursuant to this Agreement, and subject to the extension of time set forth in Section 7.5 hereof, failure or delay by any party to perform any term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if a party otherwise in default commences to cure, correct or remedy such default within thirty (30) calendar days after receipt of written notice specifying such default and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such party shall not be deemed to be in default hereunder. (b) From and after the Close of Escrow and subject to the extensions of time set forth in Section 7.5 hereof, failure or delay by any party to perform any term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if a party otherwise in default commences to cure, correct or remedy such default within thirty (30) .15 40 calendar days after receipt of written notice specifying such default and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such party shall not be deemed to be in default hereunder. (c) The injured party or injured parties shall give written notice of default to the party or parties in default, specifying the default complained of by the nondefaulting party or nondefaulting parties. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. All notices of such defaults that pertain to any two (2) parties to this Agreement shall also be given to the third party to this Agreement whether or not such third party is then in default under this Agreement. (d) Any failure or delays by any party in asserting any of their rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by any party in asserting any of their rights and remedies shall not deprive any party of their right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. (e) Both the Developer and the Participant shall be separately liable and responsible for such defaults as each may have separately or jointly caused or created pursuant to this Agreement, and, except for the rights of the Agency as may be exercised pursuant to Section 6.6 hereof which may be enforced against the joint interests of the Developer and/or of the Participant in furtherance of the right of the Agency to re-enter, repossess and revert the Agency Lots to the Agency regardless of whether the Developer and/or the Participant may have caused or created the default under such circumstances, no other default by either the Developer and/or the Participant shall cause the other of said party to be liable for the actions of the other party. 6.2 Legal Actions. (a) In addition to any other rights or remedies, any party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement. Such legal actions must be instituted in the Superior Court of the County of San Bernardino, San Bernardino District, State of California, or in the Federal District Court in the Central District of California. (b) The laws of the State of California shall govern the interpretation and enforcement of this Agreement. (c) In the event that any legal action is commenced by the Developer and/or by the Participant against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director ofthe Agency, or in such other manner as may be provided bylaw. (d) In the event that any legal action is commenced by the Agency against the Developer and/or the Participant, service of process on the Developer and/or on the Participant, as applicable, shall be made by personal service on the Chief Executive Officer, Chairman or the owner's authorized representative for service of process and at such address as provided in .15 41 Section 7.2 hereof, or as may be specified in written notice to the Agency in the manner permitted by said Section 7.2, or in such other manner as may be provided by law, and such service of process shall be valid whether made within or without the State of California. The Agency shall also provide a notice of the commencement of any such legal action to the party that is not named in such legal action in the event such legal action is filed as to only one of the other parties to this Agreement. 6.3 Rights and Remedies are Cumulative. Except with respect to any rights and remedies expressly declared to be exclusive in any Section of this Agreement as the same relates to a failure of conditions precedent occurring before the Close of Escrow, the rights and remedies of the parties as set forth in Section 6.1 through Section 6.8, and specifically this Section 6.3, are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 6.4 Damages. If any party or parties default with regard to any provision of this Agreement, the nondefaulting party or parties shall serve written notice of such default upon the defaulting party or parties. If the defaulting party or parties do not diligently commence to cure such default after service of the notice of default and promptly complete the cure of such default within a reasonable time, not to exceed thirty (30) calendar days (or such shorter period as may otherwise be specified in this Agreement for default), after the service of written notice of such a default, then the nondefaulting party or parties shall be thereupon entitled to exercise all remedies as provided in this Agreement. In the event that a default relates to a matter arising after the Close of Escrow the defaulting party or parties shall be liable to the other party or parties for damages caused by such default. As further provided in Section 6. I ( e), neither the Developer nor the Participant shall be liable for the defaults caused by the other of said parties except pursuant to the provisions of Section 6.6 whereby a default by either of said parties will enable the Agency to exercise the remedies of said Section 6.6 against both the Developer and the Participant as their interests may appear in the Agency Lots. 6.5 [RESERVED--NO TEXT] 6.6 Right to Re-enter, Repossess and Revert. (a) The Agency shall, upon thirty (30) calendar days notice to the Developer and to the Participant which notice shall specify this Section 6.6, have the right, at its option, to re-enter and take possession of all or any portion of the Agency Lots, together with all improvements thereon, and to terminate and revert to the Agency the estate conveyed to the Developer and to the Participant hereunder, if after conveyance of title, the Developer and/or the Participant (or with respect to their interests in the Agency Lots or this Agreement) shall: (I) Fail to commence construction of all or any portion of the improvements as required by this Agreement for a period of sixty (60) calendar days after written notice to proceed from the Agency; provided that the Developer and the Participant shall not .15 42 have obtained an extension or postponement to which the Developer and the Participant may be entitled pursuant to Section 7.5 hereof, if applicable; or (2) Abandon or substantially suspend construction of all or any portion of the improvements for a period of sixty (60) calendar days after written notice of such abandonment or suspension from the Agency; provided that the Developer shall not have obtained an extension or postponement to which the Developer and the Participant may be entitled to pursuant to Section 7.5 hereof, if applicable; or (3) Assign or attempt to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer, of the Agency Lots or the Site or the Project or any part thereof, in violation of this Agreement, and such violation shall not have been cured within thirty (30) calendar days after the date of receipt of written notice thereof from the Agency to the Developer and to the Participant. (b) The thirty (30) calendar day written notice specified in this Section shall specify that the Agency proposes to take action pursuant to this Section and shall specify which of the obligations of the Developer and of the Participant set forth in Subsections (I) through (3) herein have been breached. The Agency shall proceed with its remedy set forth herein only in the event that the Developer and/or the Participant continue in default of said obligation or obligations for a period of thirty (30) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion. (c) The right of the Agency to reenter, repossess, terminate and revert shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit: (I) Any mortgage, deed of trust or other security interest permitted by this Agreement; (2) Any rights or interests provided in this Agreement for the protection of the holders of such mortgages, deeds of trust or other security interests; (3) Any leases, declarations of CC&Rs, easement agreements or other recorded documents applicable to the Site. (d) The Agency Grant Deed shall contain appropriate references and provisions to give effect to the Agency's rights, as set forth in this Section under specified circumstances prior to the delivery of the Certificate of Completion of the Project with respect to such portion, to reenter and take possession of such portion, or any part thereof, with all improvements thereon, and to terminate and revert in the Agency the estate conveyed to the Developer and to the Participant. (e) Upon the reinvesting in the Agency of title to one or more of the Agency Lots, or any part thereof, as provided in this Section, the Agency shall, pursuant to its responsibilities under State of California law, use its best efforts to resell the Agency Lots, or any part thereof, as soon and in such manner as the Agency shall find feasible and consistent with the objectives of such law, to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligations of making or completing the Project, or such other improvements in their ,15 43 stead as shall be satisfactory to the Agency and in accordance with the uses specified for the Agency Lots and/or the Site, or any part thereof. Upon such resale of the Agency Lots and/or the Site, or any part thereof, the proceeds thereof shall be applied: (1) First, to make any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred with respect to the making or completion of the agreed improvements or any part thereof on the Site or any portion thereof; next to reimburse the Agency on its own behalf or on behalf of the City for all actual costs and expenses incurred by the Agency and the City, including, but not limited to, customary and reasonable fees or salaries to third party personnel engaged in such action, including the Agency's attorneys fees, in connection with the recapture, management and resale of the Site or any portion thereof; all taxes, assessments and water and sewer charges paid by the City and/or the Agency with respect to the Site or any portion thereof; any amounts otherwise owing to the Agency by either the Developer and/or the Participant and their successor transferee; and (2) Second, to the extent that any and all funds which are proceeds from such resale are thereafter available, to reimburse the Developer and/or the Participant, as applicable, or their successor transferee, up to the amount equal to the sum of the total costs incurred for the development of the Agency Lots, or applicable part thereof, or for the construction of the improvements thereon including, but not limited to, costs of carry, taxes and items set forth in the Developer's cost statement which shall be submitted to and approved by the Agency. (3) Any balance remaining after the foregoing application of proceeds shall be retained by the Agency. (f) The right of the Agency to re-enter, repossess and revert the Agency Lots to the Agency in the manner as provided herein shall be effective and enforceable against both the Developer and the Participant regardless of which of said parties had caused the default pursuant to this Agreement so long as a default by either the Developer and/or the Participant has not cured in the manner as required by this Agreement. 6.7 Mutual Indemnification. The Developer and the Participant agree to indemnify and hold the City and the Agency, and their officers, employees and agents, harmless from and against all damages, judgments, costs, expenses and fees arising from or related to (i) any act or omission of the Developer and/or the Participant in performing their obligations hereunder, (ii) the approval and execution of this Agreement by the Agency, and (iii) the adoption by the City of the resolution relative to the Agency approval and execution of this Agreement. The Agency agrees to indemnify and hold the Developer and/or the Participant and their officers, employees and agents, harmless from and against all damages, judgments, costs, expenses and fees arising from or related to any act or omission of the Agency in performing its obligations hereunder. .15 44 6.8 Attorneys' Fees. In the event of litigation between the parties arising out ofthis Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including such fees and costs incurred on appeal, in addition to whatever other relief to which it maybe entitled. As used in the preceding sentence, the words "reasonable attorneys' fees" in the case of the Agency, include the salary and costs payable to lawyers employed or retained by the Agency, who provide legal counsel to the Agency in such litigation as allocated on an hourly basis. 7. MISCELLANEOUS. 7.1 Governing Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement. 7.2 Notices. Notices, demands, and communications between the Agency, the Developer and the Participant shall be sufficiently given if personally delivered or dispatched by registered or certified mail, postage prepaid, return receipt requested, to the following addresses: If to the Agency: Redevelopment Agency of the City of San Bernardino Attn.: Executive Director 201 North "E" Street, Suite 301 San Bernardino, California 92401 If to the Developer: Arroyo Valley Community Economic Development Corporation Attn.: Antonio Dupre, Sr., President P.O. Box'1599 San Bernardino, California 92402 If to the Participant: Inland Empire Concerned African American Churches Attn.: Ray Turner, Chairman 1583 West Union Street San Bernardino, California 92411 Any notice shall be deemed to have been received as of the earlier time of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing of such notice in the United States Postal System in the manner described in this Section. Such written notices, demands, and communications may be sent in the same manner to such other addresses as a party may from time to time designate by mail. Any party to this Agreement may change or modify their address for the delivery of notices as set forth above provided that for such changes to be effective as to the other parties, notice shall be duly provided to the other parties to this Agreement in the manner as required herein. .15 45 7.3 Conflicts ofInterest. No member, official, or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official, or employee participate in any decision relating to this Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. 7.4 Nonliability of Agency Officials and Employees. No member, official, employee or consultant of the Agency or City shall be personally liable to the Developer and/or to the Participant, or any Successor-In-Interest of the Developer or of the Participant, in the event of any default or breach by the Agency or for any amount which may become due to the Developer, the Participant or to their successor, or on any obligations under the terms of this Agreement, except for gross negligence or willful acts of such member, official, employee or consultant. 7.5 Enforced Delay: Extension of Time of Performance. In addition to specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in default, or considered to be a default, where delays or defaults are due to the force majeure events of war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes or lack of transportation, weather-caused delays, inability to secure necessary labor, materials or tools, delays of any contractors, subcontractor or supplier, which are not attributable to the fault of the party claiming an extension of time to prepare or acts or failure to act of any public or governmental agency or entity (provided that acts or failure to act of the City or the Agency shall not extend the time for the Agency to act hereunder except for delays associated with lawsuit or injunction including, but without limitation to, lawsuits pertaining to the approval of the Agreement, and the like). Any denial by the City of a building permit, grading permit or such other ministerial approval that is based upon failure of the Developer, the Participant or their authorized representatives to provide adequate information and a completed application with all exhibits, drawings, maps and attachments in the form and quality as typically received by the City from other housing developers shall not entitle the Developer and/or the Participant to claim any extensions of time pursuant to this Section 7.5. An extension of time for any such force majeure cause shall be for the period of the enforced delay and shall commence to run from the date of occurrence of the delay; provided, however, that the party which claims the existence of the delay has first provided the other party with written notice of the occurrence of the delay within ten (10) calendar days after the commencement of such occurrence of delay. In addition to such force majeure provisions as specified in the preceding paragraph, in the event the Developer and/or the Participant have submitted the building plans and the site plans for the development of the New Homes on the Agency Lots and such submittal is deemed complete as evidenced in writing from the City for all purposes in connection with the review thereof by the City, and within sixty (60) calendar days thereafter the City has not either (i) issued building permits for construction of the four (4) New Homes or (ii) provided a written statement as to the inadequacy of the submittal which was previously confirmed by the City as .15 46 being deemed complete, the Developer and the Participant, subject to providing written notice to the Agency of the occurrence of such City caused delay, shall be entitled to an extension of time for the Close of Escrow on a day-for-day basis for each day that the City has delayed the issuance of either the building permits or the written statement containing the reasons for the subsequently determined inadequacy of the submittal of the building plans and the site plans. An extension of time for any such City caused delay shall be for the period of time equal to the City caused delay and shall commence to run from the date of occurrence of the City caused delay; provided, however, that the Developer and the Participant in claiming the existence of the City caused delay has first provided to the Agency written notice of the occurrence of the City caused delay within ten (10) calendar days after the commencement of such occurrence of the City caused delay. The Developer and the Participant (together, and in the aggregate) shall be entitled to claim only one (I) event as a City caused delay pursuant to the provisions of this paragraph; provided, however, that any enforced delay pursuant to the preceding paragraph shall not limit nor preclude the rights of the Developer and of the Participant (together, and in the aggregate) to claim one (I) event as a City caused delay pursuant to this paragraph. The inability of the Developer and/or the Participant to obtain a satisfactory commitment from a construction lender or to satisfy any other condition of this Agreement relating to the acquisition of the Site and the development of the Project shall not be deemed to be a force majeure event or otherwise provide grounds for the assertion of the existence of a delay under this Section 7.5. The parties hereto expressly acknowledge and agree that changes in either general economic or regulatory conditions or changes in the economic or regulatory assumptions of any of them which may have provided a basis for entering into this Agreement and which occur at any time after the execution of this Agreement, are not force majeure events and do not provide any party with grounds for asserting the existence of a delay in the performance of any covenant or undertaking which may arise under this Agreement. Each party expressly assumes the risk that changes in general economic or regulatory conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such party under this Agreement, but that such inconvenience or hardship is not a force majeure event and does not excuse the performance by such party of its obligations under this Agreement. 7.6 Books and Records. (a) Maintenance of Books and Records. The Developer and the Participant shall prepare and maintain all books, records and reports necessary to substantiate the compliance by the Developer and by the Participant with the terms of this Agreement or otherwise as may be reasonably required by the Agency. (b) Right to Inspect. The Agency shall have the right, upon not less than seventy-two (72) hours notice, at all reasonable times, to inspect the books and records of the Developer and of the Participant pertinent to the purposes of this Agreement. Said right of inspection shall not extend to documents privileged under attorney-client or other such privileges. .15 47 7.7 Modifications. Any alterations, changes or modifications of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. 7.8 Merger of Prior Agreements and Understandings. This Agreement and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations and statements, oral or written are merged herein and shall be of no further force or effect. 7.9 Representations and Warranties of the Developer and ofthe Participant. (a) The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: (I) The Developer is duly organized and validly existing. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer. (2) The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. (3) This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms. (4) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer or to the Site. All representations and warranties contained in this Section 7.9(a) are true and correct on the date hereof and on the Closing Date and the Developer's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Close of Escrow. .15 48 (b) The Participant hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: (1) The Participant is duly organized and validly existing. The Participant has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Participant hereby represent and warrant that such persons have the power, right and authority to bind the Participant. (2) The Participant has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. (3) This Agreement is, and all agreements, instruments and documents to be executed by the Participant pursuant to this Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Participant and enforceable in accordance with their respective terms. (4) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Participant is a party or by which the Participant may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Participant or to the Site. All representations and warranties contained in this Section 7 .9(b) are true and correct on the date hereof and on the Closing Date and the Participant's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Close of Escrow. 7.10 Representations and Warranties of the Agency. The Agency hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Developer and the Participant has been made and the acquisition by the Developer and the Participant of the Site will have been made in material reliance by the Developer and the Participant on such covenants, representations and warranties: (1) Each and every undertaking and obligation of the Agency under this Agreement shall be performed by the Agency timely when due; and that all representations and warranties of the Agency under this Agreement and its exhibits shall be true in all material respects at the Closing as though they were made at the time of Closing. .15 49 (2) The Agency is a community redevelopment agency, duly formed, existing and operating under the laws of California. The Agency has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. (3) The Agency has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required that has not otherwise been obtained. (4) The persons executing any instruments for or on behalf of the Agency have been authorized to act on behalf ofthe Agency and that the Agreement is valid and enforceable against the Agency in accordance with its terms and each instrument to be executed by the Agency pursuant hereto or in connection therewith will, when executed, be valid and enforceable against the Agency in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by the Agency. (5) At the Closing, the Agency will transfer the Agency Lots to effectively vest in the Developer and the Participant, good and marketable fee simple title to the Agency Lots, that the Developer and the Participant will acquire the Agency Lots free and clear of all liens, encumbrances, claims, rights, demands, easements, leases or other possessory interests, agreements, CC&Rs of any kind or character (including, without limiting the generality of the foregoing, liens or claims for taxes, mortgages, conditional sales contracts, or other title retention agreement, deeds of trust, security agreements and pledges, and mechanics lien) except for the matters covered in Section 3.6 as the Permitted Exceptions. (6) There are no pending or, to the best of the Agency's knowledge, threatened claims, actions, allegations or lawsuits of any kind, whether for personal injury, property damage, property taxes or otherwise, that could materially and adversely affect the value or use of the Agency Lots or prohibit the sale thereof to the Developer and the Participant, nor to the best of the Agency's knowledge, is there any governmental investigation of any type or nature pending or threatened against or relating to the Agency Lots or the transactions contemplated hereby. (7) Between the date of this Agreement and the Close of Escrow, the Agency will continue to manage, operate and maintain the Agency Lots in the same manner as existed prior to the execution of this Agreement. (8) There are no contracts or agreements to which the Agency is a party relating to the operation, maintenance, service, repair, development, improvement or ownership of the Agency Lots which will survive the Close of Escrow except as may be set forth in the Agency Grant Deed. .15 50 (9) The Agency Lots are located within a designated earthquake fault zone pursuant to California Public Resources Code Section 2621.9 and a designated area that is particularly susceptible to ground shaking, liquefaction, landslides or other ground failure during an earthquake pursuant to California Public Resources Code Section 2694. If the Agency becomes aware of any act or circumstance which would change or render incorrect, in whole or in part, any representation or warranty made by the Agency under this Agreement, whether as of the date given or any time thereafter through the Closing Date and whether or not such representation or warranty was based upon the Agency's knowledge and/or belief as of a certain date, the Agency will give immediate written notice of such changed fact or circumstance to the Developer and the Participant, but such notice shall not release the Agency of its liabilities or obligations with respect thereto. All representations and warranties contained in this Section 7.10 are true and correct on the date hereof and as of the Closing Date, and the Agency's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall terminate on the first calendar day following the Close of Escrow. 7.11 Binding Effect of Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their legal representatives, successors, and assigns. This Agreement shall likewise be binding upon and obligate the Site and the Successors-In-Interest, owner or owners thereof, and all of the tenants, lessees, sub lessees and occupants of such Site. 7.12 Assurances to Act in Good Faith. The Agency, the Developer and the Participant agree to execute all documents and instruments and to take all action and shall use their best efforts to accomplish the purposes of this Agreement. The Agency, the Developer and the Participant shall each diligently and in good faith pursue the satisfaction of any conditions or contingencies subject to their approval. 7.13 Business Registration Certificate. The Developer and the Participant each separately warrant that they possess, or shall obtain immediately after the execution and delivery of this Agreement, and both the Developer and the Participant shall maintain during the period of time during the term of this Agreement, a business registration certificate pursuant to Title 5 of the City of San Bernardino Municipal Code, together with any and all other licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to be maintained by the Developer and the Participant to conduct its business activities within the City. .15 51 7.14 Release of Developer and/or the Participant from Liability. Notwithstanding any provision herein to the contrary, the Developer and the Participant shall be relieved of any and all liability for the obligations of the Developer and/or the Participant, as applicable, hereunder with regard to the Project at such time as the Certificate of Completion for the Project has been issued by the Agency hereunder with respect thereto, other than as to any covenants and obligations required by the Agency Grant Deed by which the Agency Lots shall be conveyed to the Developer and to the Participant hereunder. 7.15 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. .15 52 IN WITNESS WHEREOF the Agency, the Developer and the Participant have executed this Agreement as of the date first written above. AGENCY Redevelopment Agency of the City of San Bernardino, a public body corporate and politic Date: By: Maggie Pacheco, Executive Director Approved as to Form and Legal Content: By: \~ L Agency eel DEVELOPER Arroyo Valley Community Economic Development Corporation, a California non-profit benefit corporation Date: By: Its: Name: By: Its: Name: PARTICIPANT Inland Empire Concerned African American Churches, a California non-profit corporation Date: By: Its: Name: By: Its: Name: IS 53 EXHIBIT "A" LEGAL DESCRIPTION OF THE AGENCY LOTS APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19, 19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 54 EXHIBIT "8" SCHEDULE OF PERFORMANCE Execution of Agreement Agreement shall be authorized, executed and delivered by the Developer and the Participant to the Agency. Opening of Escrow The Agency, the Developer and the Participant shall open the Escrow with the Title Company Evidencing of Financing The Developer shall provide the Agency with financing for the Project unless extended pursuant to the Agreement. Design The Developer shall prepare all plans and specifications and obtain all required permits. Evidence of Insurance The Developer shall furnish to the Agency, certificate of insurance as set forth in Section 4.1 of the Agreement. Closing of Escrow The Agency, the Developer and the Participant shall Close Escrow Commencement of Construction The Developer shall commence construction of the improvements of the Site pursuant to Section 4.1. Completion of Construction All improvements on the Site as well as off- site improvements shall be completed on or before June 16, 2008. On or before November 20, 2006. On or before January 15, 2007. On or before January 15, 2007. No later than July 15,2007. Prior to the Developer and the Participant or their agents commencing construction at the Site or having access to the Agency Lots. On or before October 16, 2007. Upon the Close of Escrow which Close of Escrow shall occur no later than October 16, 2007. No later than June 16, 2008. It is understood that this Schedule of Performance is subject to all of the terms and conditions of the text of the Agreement. The summary of the items in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any .15 55 conflict of or inconsistency between this Schedule of Performance and the text of the Agreement, the text of the Agreement shall govern. The time periods set forth in this Schedule of Performance may be altered or amended only by written agreement signed by the Developer and the Participant with the Executive Director of the Agency. The Executive Director of the Agency shall have the authority to approve extensions of time without action of the Community Development Commission of the Agency not to exceed a cumulative total of one hundred eighty (180) calendar days. .15 56 EXHIBIT "C" FORM OF AGENCY GRANT DEED RECORDING REQUESTED BY ) Redevelopment Agency ) ofthe City of San Bernardino ) ) AND WHEN RECORDED MAIL TO: ) Arroyo Valley Community Economic ) Development Corporation ) P.O. Box 1599 ) San Bernardino, California 92402 ) Attn.: Antonio Dupre Sr., President ) (Space above line reserved for use by Recorder) REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO GRANT DEED OF A PUBLIC AGENCY AND AFFORDABLE SINGLE F AMIL Y HOUSING DEVELOPMENT, USE AND OCCUPANCY CONDITIONS, COVENANTS AND RESTRICTIONS THIS GRANT DEED OF A PUBLIC AGENCY AND COMMUNITY REDEVELOPMENT AFFORDABLE SINGLE-FAMILY HOUSING DEVELOPMENT, USE AND OCCUPANCY CONDITIONS, COVENANTS AND RESTRICTIONS (the "Agency Grant Deed") hereby grants from the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency") that certain real property consisting ofland located in the City of San Bernardino, County of San Bernardino, California (Assessor's Parcel Number 0144-131-21, Assessor's Parcel Number 0144-131-36, Assessor's Parcel Number 0144-123-03 and Assessor's Parcel Number 0144-123-46) (the "Property") (the legal description of which is attached hereto and incorporated herein by this reference as Exhibit "A") to Arroyo Valley Community Economic Development Corporation ("Arroyo"), a California non-profit benefit corporation, and to Inland Empire Concerned African American Churches (the "Participant"), a California non- profit corporation, as joint owners (Arroyo and the Participant shall collectively be referred to as the "Developer") subject to the community redevelopment affordable single-family housing development, use and occupancy conditions, covenants and restrictions contained in PART B hereof. The Agency is the grantor in this Agency Grant Deed and the Developer is the grantee. .15 57 For valuable consideration, the receipt of which is hereby acknowledged, the Agency hereby grants to the Developer, subject to the community redevelopment affordable single-family housing conditions, covenants and restrictions of this Agency Grant Deed, all of the rights, title and interests of the Agency in the Property, as more particularly described below: (n The Property -- ) See Exhibit "A" attached hereto, on file in the Official Records of the Office of the Recorder of San Bernardino County. PARTB The grant of the Property by the Agency to the Developer is expressly subject to the satisfaction of the following and the community redevelopment affordable single-family housing conditions, covenants and restrictions as arise under that certain agreement entitled "2006 HOME Funds Development Agreement - Four Agency Lots", dated as of November 20, 2006 (the "Agreement"), by and between the Agency and the Developer: 1. The Property shall be reserved for use, development and occupancy for Low- Income Single-Family unit residential purposes, as the term "Low-Income Household" is defined below; and 2. During the first forty-five (45) years commencing on the date of recordation of this Agency Grant Deed for the Single-Family Unit shall be restricted, sold to and occupied by Lower Income Households at "affordable cost" as defined below; and 3. For the purposes of subparagraphs I and 2 above, the following definitions of certain terms shall apply: "lower income households" means and refers to persons and families whose income does not exceed the qualifying limits for lower income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 at 80 percent of the area median income, adjusted for family size and revised annually. PARTe Subject to the covenant of the Developer as provided in PART B, the Developer shall refrain from restricting the sale of the Property on the basis of race, color, creed, religion, sex, marital status, age, physical or mental disability, ancestry, or national origin of any person. All such deeds shall contain or be subject to, substantially, the following nondiscrimination or nonsegregation clauses: Deeds: In deeds the following language shall appear: Except as specifically provided in the Agency Regulatory Agreement with respect to the sale of the unit to a Low-Income Household, as such term is defined therein and subject to the .15 58 covenant in the Agency Grant Deed improved on the Property by the Redevelopment Agency of the City of San Bernardino which reserves the Property for use, improvement and sold to a Low-Income Household. The Developer herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, physical or mental disability, ancestry, or national origin in the sale, lease, rental, sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the Developer itself, or any persons claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number and use in the land herein conveyed. The foregoing covenants shall run with the land. The foregoing covenants shall remain in effect in perpetuity. PART D No violation or breach of the covenants, conditions, restnctlOns, proVISIOns or limitations contained in P ART B, P ART C or P ART F of this Agency Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument permitted by and approved by the Agency pursuant to the Agreement; provided, however, that any successor of the Developer to the Property shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. PARTE The terms and provisions of PART B, PART C and PART F ofthis Agency Grant Deed shall be subordinate to the terms and provisions of the construction/permanent financing and any other documents entered into by the Developer in connection with the development of the Property. Notwithstanding anything in this Agency Grant Deed to the contrary, no amendment to PART B through PART F, inclusive of this Agency Grant Deed by the Developer, or its successors or assigns and the Agency Grant Deed shall be effective at all time. PARTF The provisions of this Agency Grant Deed are expressly declared by the Agency to promote and increase, improvement, and preservation of the community's supply of low-income housing. Upon the delivery of this Agency Grant Deed to the Developer, the community redevelopment affordable single-family housing conditions, covenants, and restrictions as contained herein shall be covenants and restrictions which affect the Property and shall run with the land and shall be enforceable by either the Agency or by the City of San Bernardino, a municipal corporation, as community redevelopment affordable single-family housing conditions, covenants, and restrictions against the Developer and/or the Participant and each Successor-In-Interest or .15 59 assignee of the Developer and/or the Participant in the Property. No person other than the City of San Bernardino or the Agency shall be deemed to be authorized to enforce any provision of this Agency Grant Deed as a covenant or restriction which runs with the land and affects the Property. THIS AGENCY GRANT DEED is executed as of the date indicated below next to the authorized signature of the Executive Director of the Agency. AGENCY Redevelopment Agency of the City of San Bernardino Dated: By: Maggie Pacheco, Executive Director Approved as to Form and Legal Content: Agency Counsel [NOTARY JURAT ATTACHED] .15 60 ACCEPTANCE OF AGENCY GRANT DEED AND COMMUNITY REDEVELOPMENT AFFORDABLE SINGLE-FAMILY HOUSING DEVELOPMENT, USE AND OCCUPANCY CONDITIONS, COVENANTS AND RESTRICTIONS BY THE DEVELOPER AND/OR THE PARTICIPANT The undersigned officers of Arroyo Valley Community Economic Development Corporation ("Arroyo"), a California non-profit benefit corporation, and the officers of Inland Empire Concerned African American Churches (the "Participant"), a California non-profit corporation (Arroyo and the Participant shall collectively be referred to as the "Developer"), hereby accept the delivery of the instrument identified above as the "Agency Grant Deed and Community Redevelopment Affordable Single-Family Housing Development, Use and Occupancy Conditions, Covenants, and Restrictions" (the "Agency Grant Deed"), and the transfer of the Property from the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic, subject to the conditions, covenants, and restrictions contained in the Agency Grant Deed. The Developer hereby acknowledges and agrees that it accepts the Property in an "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS" condition and that the Developer is solely responsible for causing the Property to be improved as set forth in the Agreement by and between the Agency and the Developer. The Developer hereby further accepts and agrees to each of the community redevelopment affordable single-family residential housing use, improvement and occupancy conditions, covenants and restrictions contained in the Agency Grant Deed which touch and concern the Property and the community redevelopment covenants which run with the land, subject to the provisions of PART E of the Agency Grant Deed. THE DEVELOPER Arroyo Valley Community Economic Development Corporation, a California non-profit benefit corporation Date: By: Its: Name: By: Its: Name: .15 62 Inland Empire Concerned African American Churches, a California non-profit corporation By: Date: Its: Name: By: Its: Name: [NOTARY JURAT ATTACHED] .15 63 EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, ST ATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURF ACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19, 19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 64 EXHIBIT "0" GENERAL FORM OF HOMEBUYER ASSISTANCE PROGRAM (HAP) HOME COVENANT (Redevelopment Agency of the City of San Bernardino) THIS DOCUMENT IS PRESENTED IN GENERAL FORM. The final form of this HOME Covenant shall be completed and executed by the "Qualified Homebuyer" and the Agency at the time of close of the "New Home Escrow," as each of these items are defined in this HOME Covenant. 4839-9390-0544.1 P:\Agendas\Agenda AttachmentslAgrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attn.: Executive Director 201 North "E" Street, Suite 301 San Bernardino, CA 92401 (Space Above Line Reserved For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO HOME PROGRAM AFFORDABILlTY COVENANTS AND RESTRICTIONS AGREEMENT FOR THE AGENCY HOMEBUYER ASSISTANCE PROGRAM (AGENCY HOME PROGRAM) THESE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO COMMUNITY REDEVELOPMENT HOME COVENANTS AND RESTRICTIONS (the "HOME Covenant") is made and entered into as of by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (the "Agency"), a public body, corporate and politic, and (the "Qualified Homebuyer"), and this HOME Covenant relates to the following facts set forth in Recitals: ... RECITALS ... A. The Qualified Homebuyer proposes to acquire a single-family residence (the "New Home"), located within the City of San Bernardino (the "City"), from , to be owned and occupied by the Qualified Homebuyer as their principal residence. The legal description of the New Home is attached hereto as Exhibit "A" and incorporated herein by this reference. B. The Agency has entered into that certain Qualified Homebuyer Mortgage Loan Assistance Agreement, dated , (the "Agency Loan Agreement") with the Qualified Homebuyer, pursuant to which the Agency has agreed to provide the Qualified Homebuyer with certain purchase money mortgage financing for the acquisition of the New Home; subject to certain conditions, including the terms and conditions of this HOME Covenant. The Agency Loan Agreement indicates the Qualified Homebuyer is subject to the affordable housing program requirements of the Agency's "HOME Program", as indicated in Recital Paragraph C of the Agency Loan Agreement; and C. The terms of the Agency Loan Agreement mandate that the acquisition, use and occupancy of the New Home shall be restricted in certain respects for the term as provided herein (the "Qualified Residence Period") in order to ensure that the New Home will be used and occupied in accordance with the Agency Loan Agreement and the affordable single family residential dwelling unit development goals and objectives of the Agency. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND UNDERTAKINGS SET FORTH HEREIN, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE QUALI- FIED HOMEBUYER AND THE AGENCY DO HEREBY COVENANT AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS AS FOLLOWS: Section 1. Definitions of certain Terms. As used in this HOME Covenant, the following words and terms shall have the meaning as provided in the Recitals or in this Section 1 unless the specific context of usage of a particular word or term may otherwise require: Adjusted Family Income. The words "Adjusted Family Income" mean the anticipated total annual income (adjusted for family size) of each individual or family residing or treated as residing in the New Home as calculated in accordance with Treasury Regulation 1.167 (k) - 3(b)(3) under the code, as adjusted, based upon family size in accordance in the household income adjustment factors adjusted and amended from time to time pursuant to Section 8 of the U.S. Housing Act of 1937, as amended as this term is defined in 24 CFR Part 92.203(b)(3) for the total annual income of each individual or family residing or treated as residing in the New Home. HOME Covenant. The words "HOME Covenant" means this HOME Program Affordability Covenants and Restrictions Agreement by and between the Qualified Homebuyer and the Agency pertaining to the New Home. Code. The word "Code" means the Internal Revenue Code of 1986, as amended, and any regulation, rulings or procedures with respect thereto. Delivery Date. The words "Delivery Date" mean the date of delivery of title and possession of the New Home to the Qualified Homebuyer at the close of the New Home Escrow. Low-Income Family. The words "Low-Income Family" means persons and families whose annual income do not exceed eighty percent (80%) of the median income for the area, as determined by the united States Secretary for the Department of Housing and Urban Development with adjustments for smaller and larger families, as set forth at 24 Code of Federal Regulations (CFR) Part 92.2. 4839-9390-0544.1 2 P:\Agendas\Agenda Attachmenls\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 New Home. The words "New Home" mean and refer to the affordable single- family residential dwelling unit (including the land and landscape improvements thereon) as acquired by the Qualified Homebuyer upon the close of the New Home Escrow. A legal description of the New Home is attached to this HOME Covenant as Exhibit "A." New Home Escrow. The words "New Home Escrow" mean and refer to the real estate conveyance transaction or escrow by and between the Qualified Homebuyer and the seller of the New Home (or later, by and between the Qualified Homebuyer and the Successor-In-Interest). The transfer of the New Home to the Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the Successor-In-Interest) shall be accomplished upon the close of the New Home Escrow. Notice of Agency Concurrence. The words "Notice of Agency Concurrence" mean and refer to the acknowledgment in recordable form in which the Agency confirms that the proposed Successor-In-Interest of the Qualified Homebuyer satisfies all of the Adjusted Family Income and other requirements of this HOME Covenant for occupancy of the New Home by the Successor-In-Interest at any time during the Qualified Residence Period. Qualified Homebuyer. The words "Qualified Homebuyer" mean the purchaser of the New Home (e.g.: all persons identified as having property ownership interest vested in the New Home at the close of the New Home Escrow). At the close of the New Home Escrow, the Qualified Homebuyer shall: (i) have an annual Adjusted Family Income which does not exceed the household income qualification limits of a Low-Income Family and (ii) shall be a first-time homebuyer, as provided at 24 CFR Part 92.254 (a)(3). Qualified Residence Period. The words "Qualified Residence Period" mean the period of time beginning on the Delivery Date and ending on the date which is forty-five (45) years after the Delivery Date. Successor-In-Interest. The words "Successor-In-Interest" means and refers to the Low-Income Family which may acquire the New Home from the Qualified Homebuyer at any time during the Qualified Residence Period by purchase, assignment transfer or otherwise. The Successor-In-Interest shall be a Low- Income Family and shall otherwise satisfy the requirements of 24 CFR Part 92.254(a). Upon acquisition of the new Home, the Successor-In-Interest shall be bound by each of the covenants, conditions' and restrictions of this HOME Covenant. The titles and headings of the sections of this HOME Covenant have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict the meaning of any of the terms or provisions hereof. 4839-9390-0544.1 3 P:\A.gendas\Agenda Atlachmenls\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4_doc 10/16/2006 Section 2. Acknowledaments and Representations of the Qualified Homebuver. The Qualified Homebuyer hereby acknowledges and represents that as of the Delivery Date: (a) the total household income for the Qualified Homebuyer does not exceed the maximum amount permitted as Adjusted Family Income for a Low- Income Family adjusted for family size; (b) the Qualified Homebuyer intends to promptly occupy the New Home after the Delivery Date as the principal place of residence for the term of at least forty-five (45) years following the Delivery Date and the Qualified Homebuyer has not entered into any arrangement and has no present intention to rent, sell, transfer or assign the New Home to any third party during the Qualified Residence Period so as to frustrate the purpose of this HOME Covenant; (c) the Qualified Homebuyer has no present intention to lease or rent any room or sublet or rent a portion of the New Home to any relative of the Qualified Homebuyer or to any third person at any time during the Qualified Residence Period; and (d) the Qualified Homebuyer agrees to provide the Agency with the following items of information for inspection by the Agency promptly upon written request of the Agency: (i) State and federal income tax returns filed by all persons who reside in the New Home for the calendar year preceding the close of the New Home Escrow for inspection of such State and federal income tax returns; and (ii) current wage, income and salary statements for all person residing in the New Home at the close of the New Home Escrow; (e) the Qualified Homebuyer is aware and has been informed prior to the Delivery Date that this HOME Covenant imposes certain restrictions on the use and occupancy of the New Home during the term of this HOME Covenant and that this HOME Covenant imposes certain restrictions on the resale of the New Home during the Qualified Residence Period. The Qualified Homebuyer acknowledges and understands that the resale restrictions shall be applicable to the New Home and to any resale of the New Home from Delivery Date to the end of the Qualified Residence Period which is 20_. Dated: Initials of Qualified Homebuyer 4839-9390-0544.1 4 P:\Agendas\Agenda Attachments\Agrmls-Amend 2006\112006 Arroyo Group Home Funds Development Agreemenl4.doc 10/16/2006 Section 3. Acknowledament of Subordination of the Provisions of this HOME Covenant to the Mortaaae Securitv Interest of the First Mortaaae lender. Concurrently, upon the execution and recordation of this HOME Covenant, the Qualified Homebuyer shall obtain certain purchase money mortgage financing for the acquisition of the New Home from (the "First Mortgage Lender"). As of the Delivery Date, the Qualified Homebuyer has provided the Agency with a true and correct copy of the loan agreement by and between the First Mortgage Lender and the Qualified Homebuyer. As a condition to providing its mortgage loan to the Qualified Homebuyer, the First Mortgage Lender requires the Agency to agree that the provisions of Section 4 and Section 7 of this HOME Covenant shall be junior and subordinate to the security interest of the First Mortgage Lender in the New Home of even date herewith. The Agency hereby acknowledges and agrees that the provisions of Section 4 and Section 7 of this HOME Covenant are subordinate and junior to the security interest of the First Mortgage Lender in the New Home of even date herewith. No breach or default by the Qualified Homebuyer of any provision of Section 4 and Section 7 of this HOME Covenant, nor the exercise by the Agency of any remedy it may have against the Qualified Homebuyer in the event of such a breach or default shall affect or render invalid the lien of the First Mortgage Lender in the New Home. Thus, the First Mortgage Lender and any good faith purchaser for value from the First Mortgage Lender, its successors and assigns, including, without limitation, the United States Secretary of Housing and Urban Development, if such mortgage has been assigned to the Secretary of Housing and Urban Development, receiving title to the New Home through a trustee's sale, judicial foreclosure sale, deed in lieu of foreclosure and any conveyance or transfer thereafter, shall receive title to the New Home free and clear of the provisions of Section 4 and Section 7 of this HOME Covenant. Section 4. Covenant of the Qualified Homebuver to maintain Affordabilitv of the New Home durina the Qualified Residence Period and Covenant Relatina to Sale or Transfer of the New Home durina the Qualified Residence Period to a Successor-In-Interest. (a) The Qualified Homebuyer, for itself, its heirs, successors and assigns, hereby covenants and agrees that during the term of the Qualified Residence Period the New Home shall be used and, occupied by the Qualified Homebuyer as its principal residence, and that the New Home shall be reserved for sale, use and occupancy by the Qualified Homebuyer and/or for another Lower-Income Household as a Successor- In-Interest. The Qualified Homebuyer, for itself, its heirs, successors and assigns, further covenants and agrees that, during the Qualified Residence Period, the Agency shall have the right and duty as provided in this Section 4 to verify that each proposed Successor-In-Interest of the Qualified Homebuyer in the New Home satisfies the income requirements (based upon the Adjusted Family Income of a Low-Income Family) and that the completion of any resale or transfer of the New Home to a Successor-In- Interest shall be subject to the recordation of the "Notice of Agency Concurrence" as provided in Section 4(d). 4839-9390-0544.1 5 P:\,f\gendas\Agenda Attachmenls\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreemenl4.doc 10/16/2006 (b) The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that during the term of the Qualified Residence Period the Qualified Homebuyer shall not sell, transfer or otherwise dispose of the New Home (or any interest therein) at a sale or transfer price which exceeds ninety-five percent (95%) of the median purchase price for the area as provided in 24 CFR Part 92.25(a)(2)(iii), to a Successor-In-Interest without first obtaining the written concurrence of the Agency as provided herein. At least sixty (60) days prior to the date on which the Qualified Homebuyer proposes to transfer title in the New Home to a Successor-In-Interest, the Qualified Homebuyer shall send a written notice to the Agency as provided in Section 17 of the intention of the Qualified Homebuyer to sell the New Home to a Successor-In- Interest which includes the following true and correct information: (i) name of the proposed Successor-in-Interest (including the identity of all persons in the household of the Successor-In-Interest, proposing to reside in the New Home) together with a completed HOME Program application executed by the proposed Successor-In-Interest; (ii) copies of State and federal income tax returns for the Successor-In- Interest for the calendar year preceding the year in which the notice of intention to sell the New Home is given to the Agency; (iii) resale price of the New Home payable by the Successor-In-Interest, including the terms of all purchase money mortgage financing to be assumed, provided or obtained by the Successor-In-Interest, escrow costs and charges, realtor broker fees and all other resale costs or charges payable by either the Quaiified Homebuyer or the Successor- In-Interest; (iv) name address, and telephone number of the escrow company which shall coordinate the transfer of the New Home from the Qualified Homebuyer to the Successor-In-Interest; (v) appropriate mortgage credit reference for the Successor-In-Interest with a written authorization signed by the Successor-In-Interest authorizing the Agency to contact each such reference; and (vi) such other relevant information as the Agency may reasonably request, as provided in Section 4(c). (c) Within thirty (30) days following receipt of the notice of intention described in Section 4(b), the Agency shall provide the Qualified Homebuyer with either a preliminary confirmation of approval or a preliminary rejection in writing of the income and household occupancy qualifications of the Successor-In-Interest. The Agency shall not unreasonably withhold approval of any proposed sale of the New Home to a Successor-In-Interest who satisfies the Adjusted Family Income requirements of a Low- Income Family for occupancy of the New Home and for whom the other information as described in Section 4(b) has been provided to the Agency. In the event that the Agency may request additional information relating to the confirmation of the matters described in Section 4(b), the Qualified Homebuyer shall provide such information to the Agency as promptly as feasible. 4839-9390-0544.1 6 P:\Agendas\Agenda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreemenl4.doc 10/18/2006 (d) Upon its final confirmation of approval of the Adjusted Family Income eligibility of the Successor-In-Interest to acquire the New Home, the Agency shall deliver a written acknowledgment and approval of the resale of the New Home to the Successor-In-Interest in recordable form to the escrow holder referenced in Section 4(b)(iv) above, and thereafter the Successor-In-Interest may acquire the New Home subject to the satisfaction of the following conditions: (i) the recordation of the Notice of Agency Concurrence executed by the Successor-In-Interest and the Agency at the close of the resale escrow; (ii) the escrow holder shall have provided the Agency with a copy of the customary form of the final escrow closing statement of the Qualified Homebuyer and the final escrow closing statement for the Successor- In-I nterest; and (iii) the other conditions of the resale escrow as established by the Qualified Homebuyer and Successor-In-Interest shall have been satisfied. (e) The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that during the Qualified Residence Period the New Home shall not be leased, subleased, or rented to any third person, except for a temporary period (not to exceed twelve (12) months) in the event of an emergency or other unforeseen circumstance as may be expressly approved in writing by the Agency subject to compliance during the temporary rental period with the reasonable temporary rental occupancy conditions required by the Agency. The Qualified Homebuyer shall submit a written request to the Agency prior to the commencement of the temporary occupancy, as practicable, but in any event within not more than sixty (60) days following the commencement of a temporary rental occupancy of the New Home by a third party, which notice shall set forth the grounds on which the Qualified Homebuyer believes an emergency or other unforeseen circumstance has occurred and that a temporary rental occupancy is necessary. Section 5. Maintenance Condition of the New Home. The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that: (a) The exterior areas of the New Home which are subject to public view (e.g.: all improvements, paving, walkways, landscaping, and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. In the event that at any time during the term of the Qualified Residence Period, there is an occurrence of an adverse condition on any area of the New Home which is subject to public view in contravention of the general maintenance standard described above, (a "Maintenance Deficiency") then the Agency shall notify the Qualified Homebuyer in writing of the Maintenance Deficiency and give the Qualified Homebuyer thirty (30) days from the date of such notice to cure the Maintenance Deficiency as identified in the notice. The words "Maintenance Deficiency" include, without limitation, the following inadequate or non-confirming property maintenance conditions and/or breaches of single family dwelling residential property use restrictions: 4839-9390-0544.1 7 P:\AgendaslAgenda AttachmentslAgrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 failure to properly maintain the windows, structural elements, and painted exterior surface areas of the dwelling unit in a clean and presentable manner; failure to keep the front and side yard areas of the property free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment not regularly in use on the property; failure to regularly mow lawn areas or permit grasses planted in lawn areas to exceed nine (9") inches in height, or failure to otherwise maintain the landscaping in a reasonable condition free of weeds and debris; parking of any commercial motor vehicle in excess of seven thousand (7,000) pounds gross weight anywhere on the property, or the parking of motor vehicles, boats, camper shells, trailers, recreational vehicles and the like in any side yard or on any other parts of the property which are not covered by a paved and impermeable surface; and the use of the garage area of the dwelling unit for purposes other than the parking of motor vehicles and the storage of personal possessions and mechanical equipment of persons residing in the New Home. In the event the Qualified Homebuyer fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the Agency may thereafter conduct a public hearing following transmittal of written notice thereof to the Qualified Homebuyer ten (10) days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Qualified Homebuyer has failed to comply with the provision of this Section 5(a). If, upon the conclusion of a public hearing, the Agency makes a finding that a Maintenance Deficiency exists and that there appears to be non-compliance with the general maintenance standard, as described above, thereafter the Agency shall have the right to enter the New Home (exterior areas only) and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity the Agency may then have to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the Agency for the abatement of a Maintenance Deficiency as authorized by this Section 5(a) shall become a lien on the New Home. If the amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency to the Qualified Homebuyer, the Agency shall have the right to enforce the lien in the manner as provided in Section 5(c). (b) Graffiti which is visible from any public right-of-way which is adjacent or contiguous to the New Home shall be removed by the Qualified Homebuyer from any exterior surface of a structure or improvement on the New Home by either painting over the evidence of such vandalism with a paint which has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water as appropriate. In the event that graffiti is placed on the New Home (exterior areas only) and such graffiti is visible from an adjacent or contiguous public right-of-way and thereafter such graffiti is not removed within seventy-two (72) hours 4839-9390-0544.1 8 P:\Agendas\Agenda Attachmenls\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 following the time of its application; then in such event and without notice to the Qualified Homebuyer, the Agency shall have the right to enter the New Home and remove the graffiti. Notwithstanding any provision of Section 5(a) to the contrary. any sum expended by the Agency for the removal of graffiti from the New Home as authorized by this Section 5(b) shall become a lien on the New Home. If the amount of the lie'n is not paid within thirty (30) days after written demand for payment by the Agency to the Qualified Homebuyer. the Agency shall have the right to enforce its lien in the manner as provided in Section 5(c). (c) The parties hereto further mutually understand and agree that the rights conferred upon the Agency under this Section 5 expressly include the power to establish and enforce a lien or other encumbrance against the New Home in the manner provided under Civil Code Sections 2924, 2924b and 2924c in the amount as reasonably necessary to restore the New Home to the maintenance standard required under Section 5(a) or Section 5(b). including attorneys fees and costs of the Agency associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the Agency in connection with such action. In any legal proceeding for enforcing such a lien against the New Home, the prevailing path shall be entitled to recover its attorneys' fees and costs of suit. The provisions of this Section 5, shall be a covenant running with the land for the Qualified Residence Period and shall be enforceable by the Agency in its discretion, cumulative with any other rights or powers granted by the Agency under applicable law. Nothing in the foregoing provisions of this Section 5 shall be deemed to preclude the Qualified Homebuyer from making any alterations, additions, or other changes to any structure or improvement or landscaping on the New Home, provided that such changes comply with the zoning and development regulations of the City and other applicable law. Section 6. Protection of Aaency Investment of Moneys derived from the HOME Fund in the New Home - Aaency Investment Reimbursement. (a) For the purpose of this Section 6, the following terms shall have the meaning as provided below: "Agency Investment Reimbursement" means and refers to a portion of the Resale Profit, if any, which shall be payable to the Agency upon the sale or transfer of the New Home during the Qualified Residence Period to a person or household which does not qualify as a Successor-In-Interest to the Qualified Homebuyer. The formula for calculation the amount of the Agency Investment Reimbursement which may hereafter be payable to the Agency during the Qualified Residence Period is set forth in this Section 6. In the event that the application of the formula for determining the Agency Investment Reimbursement in any particular year during the term of the Qualified Residence Period may produce a sum which is Zero Dollars ($0) or less than Zero Dollars ($0). then in such event no Agency Investment Reimbursement amount shall be payable by the Qualified Homebuyer to the Agency. "Costs of Eligible Capital Improvements" means and refers to any substantial and permanent structural improvements to the New Home which are made to the New Home completed and paid for by the Qualified Homebuyer after the Delivery Date which 4839-9390-0544.1 9 P:\Agendas\A.genda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 satisfy all of the following conditions: (i) the improvements are made or installed and conform with all applicable provisions of the San Bernardino Municipal Code and for which the City has issued building permits; (Ii) the particular improvement is recognized under the Code as a capital improvement; (iii) if the total amount of Eligible Capital Improvements made by the Qualified Homebuyer exceeds the sum of Five Thousand Dollars ($5,000) in any calendar year, the Qualified Homebuyer has given the Agency prior written notice of its intention to make such capital improvements to the New Home; (iv) the particular capital improvement shall exceed the sum of Two Thousand Dollars ($2,000) in value, as installed in the New Home; and (v) the Qualified Homebuyer has provided suitably detailed written evidence to the Agency of the actual cost of the particular capital improvement to the New Home. "Purchase Money Mortgage" means the original balance on the Delivery Date of the New Home mortgage provided to the Qualified Homebuyer by the conventional mortgage iender (e.g., the First Mortgage Lender identified in Section 3. above), pius the originai outstanding balance of the Agency Loan also identified in Section 3, above. "Qualified Homebuyer Equity" means the down payment amount in cash paid by the Qualified Homebuyer for the New Home on the Delivery Date (e.g.: the equity or "basis" as defined under the Code, net of the Purchase Money Mortgage of the Qualified Homebuyer in the New Home), plus the reduction, if any, of the outstanding principal balance of the Purchase Money Mortgage secured by the New Home through the date of the resale of the New Home. "Resale Price" means the total consideration paid by the Successor-In-Interest, including real estate broker fees and commissions for the purchase of the New Home, but excluding escrow fees and mortgage financing costs payable or otherwise allocated to the Successor-in-Interest in connection with the transfer of the New Home from the Qualified Homebuyer to the Successor-In-Interest. "Resale Profit" means the balance of the following calculation: (Resale Price)-(Purchase Money Mortgage)-(Qualified Homebuyer Resale Cost Adjustment Factor + Costs of Eligible Improvements)=Resale Profit. Equity + Capital A portion of the Resale Profit shall be payable to the Agency by the Qualified Homebuyer in accordance with Section 5(b). "Resale Cost Adjustment Factor" means one of the following sums determined by reference to the number of years which have elapsed between the Delivery Date and the date on which the resale and transfer of the New Home to the Successor-In-Interest occurs: 4839-9390-0544.1 10 P:\Agendas\Agenda AttachmentslAgrmls-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 Date of Resale of New Home after the Delivery Date: From the Delivery Date to the 5th anniversary after Delivery Date From and including the 5th anniversary to the 10th anniversary after Delivery Date From and including the 10th anniversary to the end of the Qualified Residence Period Resale Cost Adjustment Factor: $2,000 $5,000 $10,000 (b) The Agency has used and applied certain moneys from the HOME Funds of the Agency to assist with the development of the New Home. In the event that the New Home may be sold, assigned, conveyed or otherwise transferred by the Qualified Homebuyer during the term of the Qualified Residence Period to a person or household whose Adjusted Family Income at the time of close of the New Home Escrow for such a person or family, exceeds the income level for a Low Income Household, a portion of the Resale Price of the New Home in excess of the sum of the Qualified Homebuyer Equity, plus the applicable Resale Cost Adjustment Factor, the Cost of Eligible Capital Improvements, after the applicable amount of the Purchase Money Mortgage has been paid to the First Mortgage Lender and the Agency (e.g.: the "Resale Profit" amount) shall be payable to the Agency as the Agency Investment Reimbursement in accordance with 24 CFR 92.2, and as provided in this Section 6. (c) In the event that, at any time during the Qualified Residence Period, the Qualified Homebuyer (or any Successor-In-Interest) may sell, assign, conveyor otherwise transfer the New Home to a person or household whose Adjusted Family Income exceeds the income level for a Low Income Household, a portion of the Resale Profit realized by the Qualified Homebuyer shall be payable to the Agency as the "Agency Investment Reimbursement" in the amounts as follows: Date of Resale of New Home After Delivery Date Portion of Resale Profit Payable to Agency from Resale of New Home From the Delivery Date to the 200 anniversary after 90% of Resale Profit is payable to Agency as the Delivery Date Agency Investment Reimbursement From the 2"0 anniversary to the 10 anniversary 75% of Resale Profit is payable to Agency as after the Delivery Date Agency Investment Reimbursement From the 10t" anniversary to end the 20'" 50% of Resale Profit is payable to Agency as anniversary after the Delivery Date Agency Investment Reimbursement From the 20'" anniversary to the 36"'anniversary 25% of the Resale Profit is payable to the Agency as after the Delivery Date Agency Investment Reimbursement From the 30'" anniversary after the Delivery Date to 10% of the Resale Profit is payable to the Agency as the end of the Qualified Residence Period Aoencv Investment Reimbursement 4839-9390-0544.1 11 P:\Agendas\Agenda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreemenl4.doc 10/16/2006 (d) Two (2) examples of the application of the formula described above as "Resale Profit" to determine the amount of the Agency Investment Reimbursement payable on the date of a hypothetical resale of the New Home are presented as follows: EXAMPLE A: Resale to a purchaser whose Adjusted Family Income exceeds the income level of a Low Income Household or to a purchaser who will not live in the New Home as a principal residence: Assume that on the Delivery Date the purchase price of the New Home paid b~ the Qualified Homebuyer was $290,000 and that the resale occurs on the i anniversary following the Delivery Date; Assume the Resale Price of the New Home is $400,000; Assume that Qualified Homebuyer Equity as of the date of the resale is $23,500; and Assume that the Costs of Eligible Capital Improvements as of the date of the resale is $6,000: EXAMPLE A CALCULATION OF RESALE PROFIT: $400,0001 - $302,8502 - ($23,5003 + $5,0004 + $6,0005) = $62,6506: Resale Profit (SEE ALSO FOOTNOTES, BELOW). 1 The Resale Price of the New Home to the Successor-In-Interest in Example A. 2 The Purchase Money Mortgage amount ($200,000 conventional mortgage) plus $85,000 Agency HAP Program, plus $17,850 of deferred interest payable to the Agency under the Agency Loan for seven (7) years following the Delivery Date. 3 The Qualified Homebuyer Equity in the New Home ($5,000 cash down payment plus a $10,000 reduction of outstanding principal balance on the First Mortgage Lender loan). 4 The Resale Cost Adjustment Factor in the 7'h year following the Delivery Date. 5 The aggregate amount of Costs of Eligible Capital Improvements is $6,000 in this example. 6 The Resale Profit of $62,650 is subject to a 75% allocation to pay the Agency Investment Reimbursement, or $46,988 payable to the Agency (as provided in Section 6(b)). The seller of this New Home could retain only $15,662 of the "Resale Profit" in this example since the purchaser is not a Low or Moderate Income person or household. However, the portion of the "Resale Profit," if any, allocated to the seller in this example would be in addition to the seller's recapture of its equity in the New Home, plus the Costs of Eligible Capital Improvements which in this particular example is a total sum of $34,500 payable to the seller. Thus in this example, the seller's total cash realized at time of this hypothetical sale would be $50,162. (See also Footnote NO.3 and Footnote No.4, above) 4839-9390-0544.1 12 P:\Agendas\Agenda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 The Agency Investment Reimbursement amount under Example A payable at close of the resale escrow in this hypothetical example is $46,988 (e.g., 75% of $62,650) EXAMPLE B: Resale to a purchaser who the Agency has approved as a Successor-In- Interest (e.g., a purchaser whose Adjusted Family Income DOES NOT exceed the income level of a Low Income Household and who will reside in the New Home as their principal residence): Assume same facts as in Example A and that the Successor-In-Interest also pays no more than ninety-five percent (95%) of the median purchase price of the County under Section 4(b) for the New Home at a resale price of $322,000 on the ih anniversary date following the Delivery Date; EXHIBIT B CALCULATION OF RESALE PROFIT: No Agency Reimbursement is payable to Agency as the Successor-in-Interest is a Low Income Household in this hypothetical sale. In this example, the seller of the New Home could retain the full amount of the Resale Profit. Also, note that in this example, the Successor-In-Interest's "Qualified Homebuyer Equity" will be an adjusted amount which reflects the Successor-In-Interest's new mortgage and equity basis in the New Home based upon its $322,000 purchase price for purposes of determining whether an Agency Reimbursement amount may be payable by such Successor-In-Interest in any future resale transaction during the remaining thirty eight (38) years of the term of the Qualified Residence Period. (e) The sole source of funds of the Qualified Homebuyer to pay the Agency Reimbursement Agreement shall be from the Resale Profit amount, if any, realized at the time of resale to a purchaser whose Adjusted Family Income exceeds the income level of a Low Income Household. In the event that the applicable amount of the Agency Loan is paid in full to the Agency at the time of resale of the New Home to a person or household which does not qualify as a Successor-In-Interest, the Agency shall cause to be recorded concurrently with the resale of the New Home to such person, a notice of release of the following provisions of this HOME Covenant: Section 2; Section 3; Section 5; and Section 7 Section 7. Foreclosure of Purchase Money Mortaaqe Loan of the First Mortaaae Lender and Aaency Riaht of First Refusal. (a) During the Qualified Residence Period, the Agency shall have the right (but not the obligation) to bid on the purchase of mortgage loan lien of the First Mortgage Lender secured by the New Home at the time of any trustee foreclosure sale or any judicial foreclosure sale. 4639-9390-0544.1 13 P:\Agendas\Agenda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds DevelopmentAgreemenl4.doc 10/16/2006 (b) During the Qualified Residence Period, the Agency shall have the right of first refusal to purchase the New Home from the Qualified Homebuyer on the same terms which the Qualified Homebuyer may propose to offer the New Home for resale to a Successor-In-Interest. The Agency must exercise such a right of first refusal within thirty (30) days following written notification of the intention of the Qualified Homebuyer to resell the New Home, and if the Agency accepts the offer in writing within such time period the Agency shall be bound to complete the purchase of the New Home strictly in accordance with the offer. Thereafter the Agency shall pay the "resale price" to the Qualified Homebuyer and close an escrow for the transfer of the New Home to the Agency within sixty (60) days following written notification of the intention of the Qualified Homebuyer to resell the New House. Section 8. Covenants to run with the Land. The Qualified Homebuyer and the Agency hereby declare their specific intent that the covenants, reservations and restrictions set forth herein are part of a plan for the promotion and preservation of affordable single family housing dwelling units within the territorial jurisdiction of the Agency and that each shall be deemed covenants running with the land and shall pass to and be binding upon the New Home and each Successor-In-Interest of the Qualified Homebuyer in the New Home for the term provided in Section 10. The Qualified Home- buyer hereby expressly assumes the duty and obligation to perform each of the covenants and to honor each of the reservations and restrictions set forth in this HOME Covenant. Each and every contract, deed or other instrument hereafter executed covering or conveying the New Home or any interest therein shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument. Section 9. Burden and Benefit. The Agency and the Qualified Homebuyer hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Qualified Homebuyer's legal interest in the New Home is affected by the affordable single family dwelling use and occupancy covenants hereunder. The Agency and the Qualified Homebuyer hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the New Home by the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the affordable single family housing development goals and objectives of the Agency and in order to make the New Home available for acquisition and occupancy by the Qualified Homebuyer. Section 10. Term. (a) The provisions of Section 4 and Section 7 of this HOME Covenant shall apply to the New Home and the Qualified Homebuyer and to each Successor-In-Interest for forty-five (45) years after the Delivery Date. 4839-9390-0544.1 14 P:\Agendas\Agenda Attachments\Agrmls-Amend 2006\112006 Arroyo Group Home Funds Development Agreemenl4.doc 10/16/2006 (b) Except as set forth in Section 10(a), all of the other provisions of this HOME Covenant shall apply to the New Home for a term of forty-five (45) years after the Delivery Date. (c) Any provision or section of this HOME Covenant may be terminated after the Delivery Date upon the written agreement by the Agency and the Qualified Homebuyer (or the Successor-In-Interest in the New Home), if there shall have been provided to the Agency an opinion of Agency Counsel that such a termination under the terms and conditions approved by the Agency in its reasonable discretion will not adversely affect the affordable single family housing and development goals and obligations of the Agency. Section 11. Breach and Default and Enforcement. (a) Failure or delay by the Qualified Homebuyer to honor or perform any material term or provision of this HOME Covenant shall constitute a breach hereunder; provided however, that if the Qualified Homebuyer commences to cure, correct or remedy the alleged breach within thirty (30) calendar days after the date of written notice specifying such breach and shall diligently complete such cure, correction or remedy, the Qualified Homebuyer shall not be deemed to be in default hereunder. The Agency shall give the Qualified Homebuyer written notice of breach specifying the alleged breach which if uncured by the Qualified Homebuyer within thirty (30) calendar days, shall be deemed to be an event of default. Delay in giving such notice shall not constitute a waiver of any breach or event of default nor shall it change the time of breach or event of default; provided, however, the Agency shall not exercise any remedy for an event of default hereunder without first delivering the written notice of breach as specified in this Section 11. Except with respect to rights and remedies expressly declared to be exclusive in this HOME Covenant, the rights and remedies of the Agency are cumulative with any other right or power of the Agency or the City or other applicable law, and the exercise of one or more of such rights or remedies shall not preclude the exercise by the Agency at the same or different times, of any other right or remedy for the same breach or event of default. In the event that a breach of the Qualified Homebuyer may remain incurred for more than thirty (30) calendar days following written notice, as provided above, an event of default shall be deemed to have occurred. In addition to the remedial provisions of Section 5 as related to a Maintenance Deficiency at the New Home, upon the occurrence of any event of default, the Agency shall be entitled to seek any appropriate remedy or damages by initiating legal proceedings as follows: (i) by mandamus or other suit, action or proceeding at law or in equity, to require the Qualified Homebuyer to perform its obligations and 4839-9390-0544.1 15 P;\Agendas\Agenda Attachmenls\Agrmts-Amend 2006\112006 Atroyo Group Home Funds Development Agreement4.doc 10/16/2006 covenants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the Agency; or (ii) by other action at law or in equity as necessary or convenient to enforce the obligations, covenants and agreements of the Qualified Homebuyer to the Agency. (b) Except as set forth in the next sentence, no third party shall have any right or power to enforce any provision of this HOME Covenant on behalf of the Agency or to compel the Agency to enforce any provision of this HOME Covenant against the Qualified Homebuyer or the New Home. The Agency may assign the right and power to enforce the provision of this HOME Covenant against the Qualified Homebuyer or the New Home as the successor administration agency of the Agency HOME Program to the City. Section 12. Governina Law. This HOME Covenant shall be governed by the laws .of the State of California. Section 13. Amendment. This HOME Covenant may be amended after the Delivery Date only by a written instrument executed by the Qualified Homebuyer (or the Successor-In-Interest, as applicable) and by the Agency. Section 14. Attornev's Fees. In the event that the Agency brings an action to enforce any condition or covenant, representation or warranty in this HOME Covenant or otherwise arising out of this HOME Covenant, the prevailing party in such action shall be entitled to recover from the other party reasonable attorneys' fees to be fixed by the court in which a judgment is entered, as well as the costs of such suit. For the purposes of this Section 14, the words "reasonable attorneys' fees" in the case of the Agency include the salaries, costs and overhead of lawyer's employed in the Office of Agency Counsel. Section 15. Severabilitv. If any provision of this HOME Covenant shall be declared invalid, inoperative or unenforceable by a final judgment or decree of a court of competent jurisdiction such invalidity or unenforceability of such provision shall not affect the remaining parts of this HOME Covenant which are hereby declared by the parties to be severable from any other part which is found by a court to be invalid or unenforceable. Section 16. Time is of the Essence. For each prOVISion of this HOME Covenant which states a specific amount of time within which the requirements thereof are to be satisfied, time shall be deemed to be of the essence. Section 17. Notice. Any notice required to be given under this HOME Covenant shall be given by the Agency or by the Qualified Homebuyer, as applicable, 4839-9390-0544.1 16 P:\AgendaslAgenda Attachmenls\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 by personal delivery or by First Class United States mail at the addresses specified below or at such other address as may be specified in writing by the parties hereto: If to the Agency: Redevelopment Agency of the City of San Bernardino Attn.: Executive Director 201 North "E" Street, Suite 301 San Bernardino, CA 92401 Phone: (909) 663-1044 If to the Qualified Homebuyer: Attn.: San Bernardino, California Phone: ( ) Notice shall be deemed given five (5) calendar days after the date of mailing to the party, or, if personally delivered, when received by the Executive Director of the Agency or the Qualified Homebuyer, as applicable. IN WITNESS WHEREOF, the Qualified Homebuyer and the Agency have caused this HOME Covenant to be signed, acknowledged and attested on their behalf by duly authorized representatives in counterpart original copies which shall upon execution by all of the parties be deemed to be one original document. The recordation of this HOME Covenant is authorized under 24 CFR Part 92. Date: QUALIFIED HOMEBUYER By: By: AGENCY Redevelopment Agency of the City of San Bernardino Dated: By: Maggie Pacheco, Executive Director [ALL SIGNATURES MUST BE NOTARIZED] Approved as to Form: By: Agency Counsel 4839-9390-0544.1 17 P:\Agendas\Agenda Attachmenls\Agrmls-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 EXHIBIT "An Legal Description of the New Home APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19,19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 18 EXHIBIT "En AGREEMENT BETWEEN THE DEVELOPER AND THE PARTICIPANT DATED MARCH 3, 2006 .15 19 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION ' A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) TABLE OF ARTICLES 1. AGREEMENT 2. GENERAL PROVISIONS 3. DEVELOPER'S RESPONSIBILITIES 4. OWNER'S RESPONSIBILITIES 5. SUBCONTRACTS 6. TIME 7. COMPENSATION 8. COST OF THE WORK 9. CHANGES IN THE WORK 10. PAYMENT FOR CONSTRUCTION PHASE SERVICES 11. INDEMNITY, INSURANCE, BONDS, AND WAIVER OF SUBROGATION 12. SUSPENSION AND TERMINATION OF THE AGREEMENT AND OWNER'S RIGHT TO PERFORM DEVELOPER'S RESPONSIBILITIES 13. DISPUTE RESOLUTION 14. MISCELLANEOUS PROVISIONS 15. EXISTING CONTRACT DOCUMENTS EXHIBITS. 1,2, AND 3 AMENDMENT 1 ~s :l U'0$0l{r~!$9.9iiSAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 dUDre~m~;~ .~h~~\l]DJ~r\ ~V,~~, Page 1 A VCEDC Initials ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501 (c)(3) COMMUNITY DEVELOPMENT CORPORA nON DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ARTICLE 1 AGREEMENT This Agreement is made this '3 (' ~ in the year a 006 By and between the OWNER and OWNER'S AUTHORIZED REPRESENTATIVE (OAR) Inland Empire Concerned African American Churches, 501c3 a California Non Profit Corporation (OAR): Owusu Hodari 1777 West Baseline Avenue, San Bernardino, CA 92411 PO Box 70036, San Bernardino, CA 92411 Office: (909) 663-0185; Fax (909) 381-4475 day of (V\C\f'Ch and the DEVELOPER Arroyo Valley Community Economic Development Corporation, 501c3 a California Non Profit Corporation PO Box 1599, San Bernardino, CA 92402 Office: (951) 662-3872; Fax (909) 335-9576 for services in connection with the following PROJECT Westside Homes Project (Infill Development) Assessor Parcel Numbers: 0144-131-21; 0144-131-36; 0144-123-46; 0144-123-03 (4 specific lots). San Bernardino, CA 92411 The Developer will construct on behalf of the Owner four (4) single family affordable housing units, each housing unit consisting of an. J- approximately 1,300 sq. ft. home with three (3) bedrooms, two (2) bathrooms, and an attached two (2) car garage, with one housing unit to be located on each of the four Lots listed in this agreement, (the "PROJECT"). . Notice to the parties shall be given in writing at the above Post Office Box addresses. tJI, ~n PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 dupreal1ilmsn.com OAR Initials AVCEDC InITials Page 2 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ARTICLE 2 GENERAL PROVISIONS 2.1 TEAM RELATIONSHIP The Owner and the DEVELOPER agree to proceed with the PROJECT on the basis of trust, good faith dealing and shall take all actions reasonably necessary to perform this Agreement in an economical and timely manner, including consideration of design modification and alternative material or equipment that will permit the Work to be constructed in accordance with the Redevelopment Agency (the "Agency") of the City of San Bernardino's "AFFORDABLE SINGLE FAMILY HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT - FOUR AGENCY LOTS", City of San Bernardino building codes, and other applicable codes. The DEVELOPER agrees to procure or furnish, as permitted by the law of the State of California, the pre-development phase services, the design phase services, construction phase services, Joint Mari<eting services, and Sale of each Unit services as set forth beiow. Additionally, the Developer agrees to sign a Disposition and Development Agreement (DDA) with the Agency for the development of this PROJECT, and copy of the signed DDA will be attached as an amendment to this agreement. Developer agrees to assist the Owner in obtaining the necessary loans from the lender and to sign the loan documents as the guarantor, Owner agrees that the Developer will sign the loan documents with the lender as the guarantor, and that the loan funds will be deposited into a Joint Account for use exclusively for the construction of this PROJECT. Developer agrees to apply approximately $175.000 of its eligible CHDO HOME Funds and Low-Mod Funds towards the development of this PROJECT as an interest-free loan by the DEVELOPER to the PROJECT, hereafter known as the Developer Loan Funds.. II' Owner agrees that the Developer will be entitled to pay for all expenses and costs related to this PROJECT from the Developer Loan Funds for this PROJECT and that the Developer will not be required to pay for any cost or bear any expenses related to this PROJECT from its own funds. Owner agrees that the PROJECT will receive loan funds from the Developer and not an equity contribution of the Developers actual funds. Owner also agrees that the Developer reserves the right to loan to the PROJECT its eligible City of San Bernardino Redevelopment Agency CHDO HOME Funds, Low-Mod Funds, and any other additional eligible funds to the PROJECT. The Developer reserves the right to apply additional funds to the project. Owner agrees that the Developer will be reimbursed for all funds that the Developer loans to the PROJECT, including but not limited to CHDO HOME Funds and Low-Mod Funds. Owner agrees that these funds are loans to the PROJECT and must be repaid to the Developer in full in accordance with Section 10.4.1. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 dupreal1llmsn.com !If AVCdfP Page 3 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Owner agrees that the developer will be paid for the cost of the work involved in the PROJECT, a 10% Developer Fee, and 50% of the net profits after all expenses are paid. Any additional work requested or required by the owner that is not defined in this agreement shall not be paid using the current PROJECT funds designated by the Developers Proforma for this PROJECT or any of its phases, and thus must be paid for directly by the owner. 2.1.1 The DEVELOPER represents that it is a non-profit Community Development Corporation (CDC) and a Certified Community Housing Development Organization (CHDO) familiar with the type of work it is undertaking. 2.1.2 Neither the DEVELOPER nor any of its agents or employees shall act on behalf of or in the name of the Owner unless authorized in writing by the Owner's Authorized Representative. 2.2 ARCHITECT/ENGINEER Architectural and engineering services shall be procured from licensed independent design professionals retained by the DEVELOPER or fumished by licensed employees of the DEVELOPER, or as permitted by the law of the State of California. The standard of care for architectural and engineering services performed under this Agreement shall be the care and skill ordinarily used by members of the architectural and engineering professions practicing under similar condition at the same time and locality. The person or entity providing architectural and engineering services shall be referred to as the ArchitecUEngineer. If the ArchitecUEngineer is an independent design professional, the architectural and engineering services shall be procured pursuant to a separate agreement between the DEVELOPER and the ArchitecUEngineer. 2.3 EXTENT OF AGREEMENT This Agreement is solely for the benefit of the parties, represents the entire and integrated agreement between the parties, and supersedes all prior negotiations, representations or agreements, either written or oral. The Owner and the DEVELOPER agree to look solely to each other with respect to the performance of the Agreement. The Agreement and each and every provision are for the exclusive benefit of the Owner and the DEVELOPER and not for the benefit of any third party or any third party beneficiary, except to the extent expressly provided in the Agreement. 2.4 DEFINITIONS .1 The Contract-Documents consist of: PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909.335-9576 duprea(a)msn.com &/1 OA~lnttials AVCEafO Page 4 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) a. Change orders and written amendments to this Agreement including exhibits and appendices, signed by both the Owner and the DEVELOPER; b. This Agreement except for the existing Contract Documents set forth in item e. below; c. The most current documents submitted to the Owner pursuant to Sub-paragraph 3.1.3, 3.1.4, 3.1.6, or 3.1.7; d. The information provided by the Owner pursuant to sub- paragraph 4.1.2.1 ; e. The Contract Documents in existence at the time of execution of this Agreement which are set forth in Articie 15; f. The 2006 Affordable Singie Famiiy Housing Disposition and Development Agreement by and among the Redevelopment Agency of the City of San Bernardino, a public body corporate and politic, and Arroyo Valley Community Economic Development Corporation, a Califomia nonprofit corporation, also qualified as a Community Housing Development Organization ("City of San Bernardino Redevelopment Agency's Affordable Singie Famiiy Housing Disposition and Development Agreement") provided pursuant to Sub-paragraph 4.1.1 In case of any inconsistency, conflict or ambiguity among the Contract Documents, the documents shali govern in the order in which they are listed above. .2 The term day shall mean calendar day, unless otherwise specifically defined. .3 DEVELOPERS Fee means ten percent (10%) of the total actual cost of the PROJECTs combined Pre-Construction (Design Phase) and Construction (Construction Phase) for this PROJECT. .4 Defective Work is any portion of the Work not in conformance with the Contract Documents. .5 Fast-track means an accelerated scheduiing that invoives commencing construction prior to the completion of drawings and specifications and then using means such as bid packages and efficient coordination to compress the overall scheduie. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335.9576 dUDrea@msn.com oris AVCEtttV Page 5 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .6 Final Completion occurs on the date when the Developer's obligations under this Agreement are completed, including the marketing and final sale of all four units. .7 A Material Supplier is a party or entity retained by the DEVELOPER to provide material and equipment for the Work. .8 Others means other contractors and all persons at the Worksite who are not employed by DEVELOPER, its Subcontractors or Material Suppliers. .9 The Owner is the person or entity identified as such in this Agreement and includes the Owner's Authorized Representative. .10 The 2006 City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement is an initial description of the Owner's objectives, that may include budget and time criteria, space requirements and relationships, flexibility and expandability requirements, 'special equipment and systems, and site requirements, to be included as an amendment to this agreement. .11 The PROJECT, as identified in Article 1, is the building, facility and/or other improvements for which the DEVELOPER is to perform the Work under this Agreement. .12 A Subcontractor is a party or entity retained by the DEVELOPER as an independent contractor to provide the on-site labor, materials, equipment and/or services necessary to complete a specific portion of the Work. .13 Substantial Completion of the Work, orofa designated portion, occurs on the date when the DEVELOPER'S obligations are sufficientiy complete in accDrdance with the CDntract DDcuments so that the Owner can utilize the PROJECT, Dr a designated pDrtion, for the use for which it is intended, in accordance with Amendment #1 Article 2. The issuance of a Certificate of Occupancy is not a requirement for Substantial Completion if the Certificate Df Occupancy cannot be obtained due to factors beyond the DEVELOPER'S cDntrDI. A Certificate Df Substantial Completion signed by the Owner and the DEVELOPER shall cDnfirm this date. The Certificate shall state the respective respDnsibilities of the Owner and the DEVELOPER for security, maintenance, heat, utilities, damage tD the WDrk, and insurance. The Certificate shall also list the items to be completed Dr corrected, and establish the time for their completion and correction Estimated Date of Final CDmpletiDn. .14 A sub subcontractor is a party or entity that has an agreement with a SubcontractDr to perfDrm any pDrtion of the Subcontractor's wDrk. po BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duorea(cj)msn.com 01/ OAR l/fitials A11J AVCEDC In~ials Page 6 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .15 The Work is the Design Phase Services procured or furnished in accordance with Paragraph 3.1, the AGREEMENT provided in accordance with Paragraph 3.2, the Construction Phase Services provided in accordance with Paragraph 3.3, Additional Services that may be provided in accordance with paragraph 3.9, and other services which are necessary to complete the PROJECT in accordance with and reasonably inferable from the Contract Documents. .16 Worksite means the geographical area of the PROJECT mentioned in Articie 1 where the Work is to be periormed. .17 Net profit means the profits after all expenses are paid after the final sale of all four units. .18 Project funds means the Developer loans funds and bank loan funds. .19 Developer loan funds means any and all eligible funds that the Developer loans to this PROJECT, including but not limited to CHDO HOME Funds and Low/Mod Funds. The Developer reserves the right to apply additional funds to the project. ARTICLE 3 DEVELOPER'S RESPONSIBILITIES The DEVELOPER shall be responsible for signing the loan documents as the guarantor along with the Owner as the borrower, for procuring or furnishing the design, for the construction of the Work, and for serving as the lead agency in the Joint Marketing and Sale of each home. The DEVELOPER shall exercise reasonable skill and judgment in the periormance of its services consistent with the team relationship described in Paragraph 2.1, but does not warrant nor guarantee schedules and estimates included as a part of this AGREEMENT. The Developer will provide for the inspection and testing services during construction as required by law or as mutually agreed; and The DEVELOPER and the Owner may establish a Fast-track approach to the design and construction services necessary to complete the PROJECT. Such agreement establishing a Fast-track approach and the Schedule of the Work shall be included as an exhibit to this Agreement. In the absence of such agreement, the parties shall proceed in accordance with paragraphs 3.1 and 3.3 below. 3.1 DESIGN PHASE SERVICES PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea@msn.com d OAR ~s AVCE~ Page 7 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 3.1.1 PRELIMINARY EVALUATION The DEVELOPER shall review the City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement to ascertain the requirements of the PROJECT and shall verify such requirements with the City of San Bernardino Redevelopment Agency. The DEVELOPER'S review may also provide to the Owner a preliminary evaluation of the site with regard to access, traffic, drainage, parking, building piacement and other considerations affecting the building, the environment and energy use, as well as information regarding applicable governmental laws, regulations and requirements. The DEVELOPER may also propose alternative architectural, civil, structural, mechanical, electrical and other systems for review by the Owner, to determine the most desirable approach on the basis of cost, technology, quality and speed of delivery. The DEVELOPER may also review existing test reports but will not undertake any independent testing nor be required to furnish types of information derived from such testing in its Preliminary Evaluation. Based upon its review and verification of the City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement and other relevant information the DEVELOPER shall provide a Preliminary Evaluation of the PROJECT's feasibility. The DEVELOPER'S Preliminary Evaluation shall specifically identify any deviations from the City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement. .13.1.2 PRELIMINARY SCHEDULE The DEVELOPER shall prepare a prelirninary schedule of the Work. The Owner shall review milestone dates established in the preliminary schedule of the Work. The schedule shall show the activities of the DEVELOPER necessary to meet the City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement completion requirements. The schedule shall be updated periodically with the level of detaii for each schedule update reflecting the information then available, if an update indicates that a previously approved schedule will not be met, the DEVELOPER shall inform the owner of the corrective actions during their regularly scheduled meetings. 3.1.3 PREL1MINARY ESTlMA TE When sufficient PROJECT information has been identified, the DEVELOPER shall prepare a preliminary estimate utilizing area, volume or similar conceptual estimating techniques. The estimate shall be updated periodically with the level of detail for each estimate update reflecting the information then available. If the preliminary estimate or any update exceeds the PROJECT's budget, the DEVELOPER shall inform the Owner. 3.1.4 SCHEMATIC DESIGN DOCUMENTS The DEVELOPER shall submit copies of the Schematic Design Documents, based on the Preliminary Evaluation. Schematic Design Documents shall include drawings, outline specifications and other conceptual documents illustrating the PROJECT's basic elements, scale, and their relationship to the Worksite. One set of these documents shall be furnished to the Owner for review. When the DEVELOPER submits the Schematic Design Documents the DEVELOPER shall identify in writing all material changes and deviations that have laken place from the PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909-335-9576 duprea@msn.com r1Jff OAR Initials !rrJ/ AVCE6c Initials Page 8 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) DEVELOPER'S Preliminary Evaluation, schedule and estimate. The DEVELOPER shall update the preliminary schedule and estimate based on the Schematic Design Documents. 3.1.5 PLANNING PERMITS The DEVELOPER shall obtain and pay for planning permits necessary for the construction of the PROJECT utilizing the available PROJECT funds. 3,1.6 DESIGN DEVELOPMENT DOCUMENTS The DEVELOPER shall submit to the Owner copies of the Design Development Documents based on the Schematic Design Documents. The Design Development Documents shall further define the PROJECT including drawing and outline specifications fixing and describing the PROJECT size and character as to site utilization, and other appropriate elements incorporating the structural, architectural, mechanical and electrical systems. One set of these documents shall be furnished to the Owner for review. When the DEVELOPER submits the Design Development Documents, the DEVELOPER shall identify in writing all material changes and deviations that have taken place from the Schematic Design Documents. The DEVELOPER shall update the schedule and estimate based on the Design Development Documents. 3.1,7 CONSTRUCTION DOCUMENTS The DEVELOPER shall submit to the Owner copies of the Construction Documents based on the Design Development Documents. The Construction Documents shall set forth in detail the requirements for construction of the Work, and shall consist of drawings and specification based upon codes, laws and regulations enacted at the time of their preparation. When tine DEVELOPER submits the Construction Documents, the DEVELOPER shall identify in writing all material changes and deviations that have taken place from the Design Development Documents. Construction shall be in accordance with the Construction Documents. 3,1.8 OWNERSHIP OF DOCUMENTS The Developer shall maintain ownership of tine property rights, except for copyrights, of all documents, drawing, specifications, electronic data and infonmation prepared, provided or procured by the DEVELOPER, its Architect/Engineer, Subcontractors and consultants, and distributed to the Owner for this PROJECT. ("DEVELOPER Documents") 3.2 REVIEW AND AMENDMENTS TO AGREEMENT The DEVELOPER shall meet with the Owner to review the AGREEMENT. In the event that the Owner has any comments relative to the AGREEMENT, or finds any inconsistencies or inaccuracies in the infonmation presented, the parties shall discuss possible resolutions and make changes in the form of an amendment to this Agreement. 3,2.1 DEVELOPER'S CONTINGENCY The AMENDMENTS to the AGREEMENT will contain, as part of the estimated Cost of the Work, the DEVELOPER'S' Contingency, and a sum mutually agreed upon and monitored by the DEVELOPER and PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909-335.9576 duprea(almsn.com /C.t! OAR Initials Aft) AVCEDC InITials Page 9 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) the Owner for use at the DEVELOPER'S discretion to cover costs which are properly reimbursable as a Cost of the Work but are not the basis for a Change Order. 3.3 CONSTRUCTION PHASE SERVICES; MARKETING AND SALE OF UNITS PHASE SERVICES 3.3.1 The Construction Phase will commence upon the Completion of the DESIGN PHASE SERVICES. If construction commences prior to the DESIGN PHASE SERVICES, the DEVELOPER shall prepare for the Owner's information purposes only a schedule of work to be periormed. 3,3.2 In order to complete the Work, the DEVELOPER shall provide all necessary construction supervision, inspection, construction equipment, labor, materials, tools, and subcontracted items. 3.3.3 The DEVELOPER shall give all notices and comply with all laws and ordinances legally enacted at the date of execution of the Agreement, which govern the proper periormance of the Work. 3,3,4 The DEVELOPER shall obtain and pay for the building permits necessary for the construction of the PROJECT from the Project Funds. 3.3.5 The DEVELOPER shall keep such full and detailed accounts as are necessary for proper financial management under this Agreement. The DEVELOPER shall preserve all such records for a period of three years after the final payment or longer where required by law, owner shall have the right to review and audit such records at the owner's expense. 3.3.6 The DEVELOPER shall provide periodic written reports as required by the DDA to the Owner on the progress of the Work in such detail as deemed necessary by the DEVELOPER. 3.3.7 The DEVELOPER shall develop a system of cost reporting for the Work, including regular monitoring of actual costs for activities in progress and estimates for uncompleted tasks and proposed changes in the Work. Copies of the reports shall be presented to the Owner at mutually agreeable intervals. 3.3.8 The Joint Marketing and Sale of Units Phase will commence during the Design and Construction Phases. The Developer will serve as the lead agency in the marketing and sale of the units. The Developer and the Owner will develop the affirmative marketinQ procedures and requirements for the Units. They will include: Methods for informing the public; PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea@msn.com ~s AVCEi;!J:rO Page 10 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Requirements and practices that Developer and Owner will adhere to in order to carry out the City of San Bemardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement affirmative marketing procedures and requirements; Procedures used by Developer and Owner to inform and solicit applications from persons in the housing market area who are not likely to apply without special outreach; Records that will be kept describing actions taken by Developer and Owner to affirmatively market units and records to assess the results of these actions; and A description of how Developer and Owner will assess the success of affirmative marketing actions and what corrective actions will be taken where affirmative marketing requirements are not met. 3.3.9 The Developer and Owner agree to Market and Sell each unit in a timely manner. It is the Developers and Owner's sole responsibility to sell each unit to qualified buyers as fast as possible to ensure cost containment. The Developer as the lead agency will have the final authority to approve all qualified buyers. Precise guidelines for performance by both parties will be set forth in the Marketing and Sales Plan for each unit 3.4 SCHEDULE OF WORK The DEVELOPER shall prepare and submit a Schedule of Work for the Owner's informational purposes. This schedule shall indicate the dates for the start and completion of the various stages of the Work, including the dates when information and approvals are required from the Owner. The Schedule shall be revised as required by the conditions of the Work. 3.5 SAFETY OF PERSONS AND PROPERTY 3.5.1 SAFETY PRECAUTIONS AND PROGRAMS The DEVELOPER shall have responsibility for safety precautions and programs in the performance of the Work. While the provisions of this Paragraph establish the responsibility for safety between the Owner and the DEVELOPER, they do not relieve Consultants and Subcontractors of their responsibility for the safety of persons or property in the performance of their work, nor for compliance with the provisions of applicable laws and regulations. 3.5.2 The DEVELOPER shall seek to avoid injury, loss or damage to persons or property by taking reasonable steps to protect; .1 Its employees and other persons at the Worksite; .2 materials, supplies and equipment stored at the Worksite for use in performance of the Work; and PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea@msn.com t)# OAR Initials Af1? AVCEDC Inttials Page 11 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .3 The PROJECT and all property located at the Worksite and adjacent to work areas, whether or not said property or structures are part of the PROJECT or involved in the Work. 3.5.3 DEVELOPER'S SAFETY REPRESENTATIVE The DEVELOPER shall designate an individual at the Worksite who shall act as the DEVELOPER'S designated safety representative with a duty to prevent accidents. Unless otherwise identified by the DEVELOPER in writing, the designated safety representative shall be the DEVELOPER'S PROJECT superintendent. 3.5.4 Damage or loss not insured under property insurance which may arise from the performance of the Work. to the extent of the negligence attributed to such acts or omissions of the DEVELOPER, or anyone for whose acts the DEVELOPER may be liable. shall be promptly remedied by the DEVELOPER. Damage or loss attributed to the acts or omissions of the Owner or Others and not to the DEVELOPER shall be promptly remedied by the Owner. 3.6 HAZARDOUS MATERIALS 3.6.1 A Hazardous Material is any substance or material identified now or in the future as hazardous under any federal. state or local law or regulation, or any other substance or material which may be considered hazardous or otherwise subject to statutory or regulatory requirements goveming handling, disposal and/or clean-up. The DEVELOPER shall not be obligated to commence or continue work until all Hazardous Material discovered at the Worksite has been removed. rendered or determined to be harmless by the Owner as certified by an independent testing laboratory approved by the appropriate government agency. 3.6.2 If after the commencement of the Work. Hazardous Material is discovered at the PROJECT, the DEVELOPER shall be entitled to immediately stop Work in the affected area. The DEVELOPER shall report the condition to the Owner and, if required, the govemment agency with jurisdiction. The DEVELOPER shall not be required to perform any Work relating to or in the area of Hazardous Material without written mutual agreement. 3.6.3 Unless agreed to by the Owner and Developer in an Amendment to this Agreement the Owner shall be responsible for retaining an independent testing laboratory to detenmine the nature of the material encountered and whether it is a Hazardous Material requiring corrective measures and/or remedial action. Such measures shall be the sole responsibility of the Owner. and shall be perfonmed in a manner minimizing any adverse effects upon the Work of the DEVELOPER. The DEVELOPER shall resume Work in the area affected by any Hazardous Material only upon written agreement between the parties after the Hazardous Material has been removed or rendered harmless and only after approval. if necessary, of the government agency or agencies with jurisdiction. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335.9576 duprea((ilmsn.com tJ,1/ OAR Initials AvO AVCEDC Initials Page 12 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 3.6.4 If the DEVELOPER incurs additional costs andlor is delayed due to the presence or remediation of Hazardous Material. the DEVELOPER shall be entitled to an equitable adjustment in the Percentage of the Profits after all expenses are paid, compensation for Design Phase Services, the DEVELOPER'S Fee and/or the Estimated Date of Substantial Completion andlor the Estimated Date of Final Completion. 3.6.5 Provided the DEVELOPER, its Subcontractors, Material Suppliers and Subcontractors, and the agents, officers, directors and employees of each of them, have not, acting under their own authority, knowingly entered upon any portion of the Work containing Hazardous materials, and to the extent not caused by the negligent acts or omissions of the DEVELOPER, its Subcontractors, Material Suppliers and Subcontractors, and the agents, officers, directors and employees of each of them, the Owner shall defend, indemnify and hold hanmless the DEVELOPER, its Subcontractors and Sub subcontractors, and the agents, officers, directors and employees of each of them, from and against any and all direct claims, damages, losses, costs and expenses, including but not limited to attorney's fees, costs and expenses incurred in connection with any dispute resolution process, arising out of or relating to the performance of the Work in any area affected by Hazardous Material. To the fullest extent permitted by law, such indemnification shall apply regardless of the fault, negligence, breach of warranty or contract, or strict liability of the Owner. 3.6.6 Material Safety Data (MSD) sheets as required by law and pertaining to materials or substances used or consumed in the performance of the Work, whether obtained by the DEVELOPER, Subcontractors, the Owner or Others, shall be maintained at the PROJECT by the DEVELOPER and made available to the Owner and Subcontractors. 3.6.7 During the DEVELOPER'S performance of the Work, the DEVELOPER shall be responsible for the proper handling of all materials brought to the Worksite by the DEVELOPER. Upon the issuance of the Certificate of Substantial Completion, the Owner shall be responsible under this Paragraph for materials and substances brought to the site by the DEVELOPER if such materials or substances are required by the Contract Documents. 3.6.8 The terms of this Paragraph 3.6 shall survive the completion of the Work under this Agreement andlor any tenmination of this Agreement. 3.7 WARRANTIES AND COMPLETION 3.7.1 The DEVELOPER warrants that all materials and equipment furnished under the Construction Phase of this Agreement will be new unless otherwise specified, of good quality, in confonmance with the Contract Documents, and free from defective workmanship and materials. Warranties shall commence on the Estimated Date of Substantial Completion of the Work or of a designated portion. The DEVELOPER agrees to correct all construction perfonmed under this Agreement which is defective in PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9578 dupreatlilmsn.com /ft# OAR Initials rtPO A VCEDC Initials Page 13 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) workmanship or materials within a period of one year from the Estimated Date of Substantial Completion or for such longer periods of time as may be set forth with respect to specific warranties required by the Contract Documents. 3.7.2 The DEVELOPER shall collect all written warranties and equipment manuals and deliver copies of them to the new homeowner at the close of escrow 3.7.3 The DEVELOPER shall direct the checkout of utilities and start up operations, and adjusting and balancing of systems and equipment for readiness. 3.8 CONFIDENTIALITY The DEVELOPER shall treat as confidential and not disclose to third persons, except Subcontractors, Sub subcontractors and the Architect/Engineer as is necessary for the performance of the Work, or use for its own benefit any of the Owner's developments, confidential inforrllation, know-how, discoveries, production methods and the like that may be disclosed to the DEVELOPER orwhich the DEVELOPER may acquire in connection with the Work. The Owner shall treat as confidential information all of the DEVELOPER'S estimating systems and historical and parameter cost data that may be disclosed to the Owner in connection with the performance of this Agreement. 3.9.1 INCLUDED SERVICES The DEVELOPER shall provide or procure the following Services at the sole discretion of the Developer. If the owner requires additional services beyond what is listed below, then a written amendment to this agreement shall define the extent of such Additional Services before the DEVELOPER perforrlls them. If such an Amendment to this AGREEMENT has been established for the Additional Work or any portion of the Work, such Additional Services shall be considered a Change in the Work, as set forth in the Amendment to this agreement. .1 Development of the City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement, establishing the PROJECT budget, investigating sources of financing, general business planning and other information and documentation as may be required to establish the feasibility of the PROJECT. .2 Consultations, negotiations, and documentation supporting the procurement of PROJECT financing. .3 Surveys, site evaluations, legal descriptions and aerial photographs. .4 Appraisals of existing properties, and developed properties. .5 Soils, subsurface and environmental studies, reports and investigations required for submission to the governmental authorities or others having jurisdiction over the PROJECT. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 dupreaC1ilmsn.com I!tf OAR 1m ials ItP'O AVCEDC Initials Page 14 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501 (c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .6 Consultations and representations before governmental authorities or others having jurisdiction over the PROJECT other than normal assistance in securing building permits. .7 Investigations or making measured drawings of existing conditions. .8 Artistic rendering, models and mockups of the PROJECT or any part of the PROJECT of the Work as deemed necessary by the Developer. 3.9.2 ADDITIONAL SERVICES If additional services beyond what is listed under Included Services are required by the owner, then a wrillen amendment to this agreement shall define the extent of such Additional Services before they are performed by the DEVELOPER. If such an Amendment to this AGREEMENT has been established for the Additional Work or any portion of the Work, such Additional Services shall be considered a Change in the Work, as set forth in the Amendment to this agreement. .1 The premium portion of overtime work requested by the Owner, including productivity impact costs, other than that required by the DEVELOPER to maintain the Schedule of Work. These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. .2 Out-of-town travels by the Architect-Engineer in connection with the Work, except between the Architect/Engineer's office, the DEVELOPER'S office, the Owner's office and the Worksite. These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. .3 Services requested by the Owner or required by the Work which are not specified in the Contract Documents and which are not normally part of generally accepted design and construction practice. These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. .4 Serving or preparing to serve as an expert witness in connection with any proceeding, legal or otherwise, regarding the PROJECT. These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duorea@msn.com t1,j/ OAR initials qD AVCEDC Initials Page 15 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501{c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .5 Document reproductions exceeding the limits provided for in this Agreement. These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. 3.10 DEVELOPER'S REPRESENTATIVE The DEVELOPER shall designate a person(s) who shall be the DEVELOPER'S authorized representative. The Developer reserves the right to change its authorized representatives or add additional persons as deemed necessary by the Developer. The DEVELOPER'S Representatives are Antonio F. Dupre Sr. and Anaela Saunders. ARTICLE 4 OWNER'S RESPONSIBILITIES 4.1 INFORMATION AND SERVICES PROVIDED BY OWNER 4.1.1 The Owner shall provide to the Developer copies of all documents provided to the Owner by the Agency. in a timely manner 4.1.2 The DEVELOPER shall be entitied to rely on the completeness and accuracy of the infonmation and services required by this Paragraph 4.1. 4.2 OWNERS RESPONSIBILITIES DURING DESIGN PHASE 4.2.1 The Owner shall provide to the Developer the City of San Bernardino Redevelopment Agency's development and design requirements at the inception of the Design Phase and shall review the PROJECT schedule, estimates, Preliminary Estimate, Schematic Design Documents, Design Development documents and Construction Documents furnished during the Design Phase as set forth in Paragraph 3.1, and any Amendments to this AGREEMENT as set forth in Paragraph 3.2 to ensure that the Owner is familiar with the scope of the PROJECT. 4.3 RESPONSIBILITIES DURING CONSTRUCTION PHASE 4.3.1 The Owner shall review the Schedule of the Work as set forth in Paragraph 3.4 and the milestone dates set forth. 4.3.2 If the Owner becomes aware of any error, omission of failure to meet the requirements of the Contract Documents or any fault or defect in the Work, the Owner shall give prompt written notice to the DEVELOPER. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea@)msn.com (!tf JtrO AVCEDC In~ials Page 16 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 4.3.3 The Owner shall not communicate directly with the DEVELOPER'S Subcontractors, Material Suppliers and the Architect/Engineer. The Owner shall have no contractual obligations to Subcontractors, Suppliers, or the Architect/Engineer. 4.3.4 The Owner and the Developer shall jointly provide insurance for the PROJECT as provided in Article 11. ~u OWNER'S AUTHORIZED REPRESENTATIVE The Owner's Authorized Representative is Owusu Hodarl. The Owners Authorized Representative: .1 shall be the initial person to contact for all communications from DEVELOPER; .2 agrees to furnish the information and services pursuant to Paragraph 4.1 so as not to delay the DEVELOPER'S work; and .3 shall have authority to bind the Owner in all matters requiring the Owner's approval, authortzation or written notice. If the Owner changes its representative or the representative's authority as listed above, the Owner shall notify the DEVELOPER in writing in advance. 4.5 ADDITIONAL SERVICES If Owner wants any of these services they are a contract change order subject to the requirements stated in Article 9 of this Agreement. 4.5.1 Any revisions to the Schematic Design, Design Development, Construction Documents or document forming the basis of Amendments to the DEVELOPMENT AGREEMENT after they have been approved by the Owner. These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. ARTICLE 5 SUBCONTRACTS Work not performed by the DEVELOPER with its own forces shall be performed by Consultants, Subcontractors or the Architect/Engineer. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909-335-9576 duprea((i!msn.com /J# OAR Inttials 4?0 AVCEDC Initials Page 17 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 5.1 RETAINING SUBCONTRACTORS The DEVELOPER shall retain all Consultants, subcontractors, and the Architect/Engineer. The Owner may propose subcontractors to be considered by the DEVELOPER, but the Developer is under no obligation to retain any Consultants, Subcontractors or the Architect/Engineers proposed by the Owner. The DEVELOPER shall not be required to retain any subcontractor to whom the DEVELOPER has an objection. 5.2 MANAGEMENT OFCONSULTANTS, SUBCONTRACTORS AND ARCHITECT/ENGINEER The DEVELOPER shall be responsible for the management of the Consultants, Subcontractors and the Architect/Engineer in the performance of their work. 5.3 BINDING OF CONSULTANTS, ARCHITECT/ENGINEER, SUBCONTRACTORS AND MATERAL SUPPLIERS The DEVELOPER agrees to bind every Consultant, Architect/Engineer, Subcontractor and Material Supplier (and require every Consultant, Architect/Engineer, Subcontractor to so bind its Consultant, Architect/Engineer, Subcontractors and Material Suppliers) to all provisions of this Agreement and the Contract Documents as they apply to the Consultant, Architect/Engineer, Subcontractor's and Material Supplier's portions of the Work. 5.4 LABOR RELATIONS The Developer will handle all labor relations with its employees, subcontractors, Architect/Engineer and Consultants based on its in-house policies and procedures. ARTICLE 6 TIME 6.1 DATE OF COMMENCEMENT The Date of Commencement is the effective date of this Agreement as first written in Article 1, and the signing of this agreement will be considered as the official notice to proceed. The Work shall proceed in general accordance with the Schedule of Work as such schedule may be amended from time to time, subject, however, to other provisions of this Agreement. 6.2 SUBSTANTIAUFINAL COMPLETION Unless the parties agree otherwise, the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion shall be established in this Agreement subject to adjustments as provided for in the Contract Documents. If such dates are not established upon execution of this Agreement, at such time as the Estimated Date of Substantial Completion and the Estimated Date of PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea@msn.com (/;1 OA Initials M1J AVCEDC Initials Page 18 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Final Completion are known by the Developer, the Developer will provide such dates to the Owner. 6.2.1 Time limits stated in the Contract Documents are of the essence. 6.2.2 The DEVELOPER shall not commence the Work before the effective date of insurance that is required to be provided by the DEVELOPER and the Owner. 6.2.3 The Estimated Date of Substantial Completion andlor the Estimated Date of Final Completion, and the Schedule of Work upon which the Estimated Date of Substantial Completion andlor the Estimated Date of Final Completion may be adjusted by; .1 a statement of Additional Services included, if any; .2 the time limit for acceptance of the AGREEMENT; .3 a statement of any work to be self-performed by the DEVELOPER; and 6.3 DELAYS IN THE WORK 6.3.1 If causes beyond the DEVELOPER'S control delay the progress of the Work, then compensation for Design Phase Services, the DEVELOPER'S Fee andlor the Estimated Date of Substantial Completion andlor the Estimated Date of Final Completion shall be modified by Change Order as appropriate. Such causes shall include but not be limited to: changes ordered in the Work, acts or omissions of the Owner or Others, the Owner preventing the DEVELOPER from performing the Work pending dispute resolution, Hazardous Materials or differing site conditions. Causes beyond the control of the DEVELOPER do not include acts or omissions on the part of the DEVELOPER, Consultants, Subcontractors, Sub-subcontractors, Material Suppliers or the ArchitecUEngineer. 6.3.2 To the extent a delay in the progress of the Work is caused by adverse weather conditions not reasonably anticipated, fire, unusual transportation delays, general labor disputes impacting the PROJECT but not specifically related to the Worksite, govemmental agencies, or unavoidable accidents or circumstances, the DEVELOPER shall be entitled to reimbursement of its additional actual costs caused by the delay and an extension of the Estimated Date of Substantial Completion andlor the Estimated Date of Final Completion. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909-335.9576 duprea@msn.com &11 OAR Initials AfO A VCEDC Initials Page 19 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORA nON A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 6.3.3 In the event delays to the PROJECT are encountered for any reason, the parties agree to undertake reasonable steps to mitigate the effect of such delays. , ARTICLE 7 COMPENSATION 7.1 DESIGN PHASE .COMPENSATION 7.1.1 To the extent required by applicable law, the cost of services perfonmed directly by the Architect/Engineer is computed separately and is independent from the DEVELOPER'S compensation for work or services perfonmed directly by the DEVELOPER; these costs shall be shown as separate items on applications for payment. If an Architect I Engineer is retained by the DEVELOPER, the payments to the Architect/Engineer shall be as detailed in a separate agreement between the DEVELOPER and the Architect I Engineer. 7.1.2 The Owner agrees that the DEVELOPER will be paid from the PROJECT loan funds for services performed during the Design Phase as described in Paragraph 3.1, including preparation of any Amendment to this AGREEMENT, if applicable, as described in Paragraph 3.2, as follows: The Developer shall be compensated for the actual cost of all services and fees and shall be payable when invoiced. If a stipuiated sum is agreed to by the Owner and the Developer then the agreed to portion of the sum shall be payable each month. 7.1.3 Compensation for Design Phase Services, as part of the Work, shall include the DEVELOPER'S Fee as established in Paragraph 7.3, paid in proportion to the services perfonmed, subject to adjustment as provided in Paragraph 7.4. 7.1.4 Within fifteen (15) days after receipt of each monthly application for payment, the Owner agrees that the DEVELOPER will be paid from the PROJECT funds paid directly to the DEVELOPER the appropriate amount for which application for payment is made, less amounts if any, previously paid. 7.1.5 If the DEVELOPER is not paid at the time payment of any amount becomes due, then the DEVELOPER may, at any time thereafter, upon serving written notice that the Work will be stopped within seven (7) days after receipt of the notice by the Owner, and after such seven (7) day period, stop the Work until payment of the amount owing has been received. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909-335-9576 duprea@msn.com /lm{( 4rD A VCEDC Initials Page 20 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 7.1.6 Payments due pursuant to Sub-paragraph 7.1.5, may bear interest from the date payment is due at the prime rate prevailing at the location of PROJECT. 7.2 CONSTRUCTION PHASE COMPENSATION 7.2.1 The Owner agrees that the DEVELOPER will be paid from the PROJECT loan funds for Work performed following the commencement of the Construction Phase on the following basis: .1 the Cost of the Work allowed in Article 8; and .2 the DEVELOPER'S Fee paid in proportion to the services performed subject to adjustment as provided in Paragraph 7.4. 7.2.2 The compensation to be paid under this Paragraph 7.2 shall be limited to the AGREEMENT established and any Amendments thereof, as the AGREEMENT may be adjusted under Article g. 7.2.3 Payment for Construction Phase Services shall be as set forth in Article 10. If Design Phase Services continue to be provided after construction has commenced, the DEVELOPER shall continue to be compensated as provided in Paragraph 7.1, or as mutually agreed. 7.3 DEVELOPER'S FEE The DEVELOPER'S Fee shall be as follows, subject to adjustment as provided in Paragraph 7.4: Ten percent (10%) of the total actual cost of the PROJECTs combined Pre-Construction (Design Phase) and Construction (Construction Phase) for this PROJECT. The stipulated sum is due and payable each month. The portion of the sum due monthly will be determined by the Developer and based on the percentage of work performed for the month that is being billed. 7.4 ADJUSTMENT IN THE DEVELOPER'S FEE Adjustment in the DEVELOPER'S Fee shall be made as follows: .1 for changes in the Work as provided in Article 9, the DEVELOPER'S Fee shall be adjusted as follows: Ten percent (10%) of the increase dollar value of the changes in the Work as provided in Article 9, plus the total cost of the PROJECTs combined Pre-Construction (Design Phase) and Construction (Construction Phase) for this PROJECT. .2 for delays in the Work not caused by the DEVELOPER, except as provided in Sub-paragraph 6.3.2, there will be an equitable adjustment in the DEVELOPER'S Fee to compensate the DEVELOPER for increased expenses; and PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 dUDrea@msn,com ~tI R nltials ~ AVCEDC Initials Page 21 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .3 if the DEVELOPER is placed in charge of managing the replacement of an insured or uninsured loss, the DEVELOPER shall be paid an additional fee in the same proportion that the DEVELOPER'S Fee bears to the estimated Cost of the Work for the replacement. 7.5 MARKETING AND SALE OF UNITS PHASE 7.5.1 The Owner and the DEVELOPER agree to jointly develop and implement the Marketing and Sale of Units Phase on the following basis: .1 the Cost of the Work allowed in Article 8; and .2 the cost shall not exceed the line item budget for Marketing and Sale of Units Phase. ARTICLE 8 COST OF THE WORK The Owner agrees that the DEVELOPER will be paid from the PROJECT loan funds for the Cost of the Work as defined in this Article. This payment shall be in addition to the DEVELOPER'S Fee stipulated in Paragraph 7.3. 8.1 COST ITEMS FOR DESIGN PHASE SERVICES 8.1.1 Compensation for Design Phase Services as provided in Paragraph 7.1. 8.2 COST ITEMS FOR CONSTRUCTION PHASE SERVICES 8.2.1 Wages paid for labor in the direct employ of the DEVELOPER in the performance of the Work. 8.2.2 Reasonable transportation, travel, hotel and moving expenses of the DEVELOPER'S personnel incurred in connection with the Work. 8.2.3 Cost of all materials, supplies and equipment incorporated in the Work, including costs of inspection and testing if not provided by the Owner, transportation, storage and handling. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335;9576 duprea@msn.com IJ/I OAR Initials A'fD AVCEGC Initials Page 22 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 8.2.4 Payments made by the DEVELOPER to Subcontractors for work performed under this Agreement. 8.2.5 Fees and expenses for design services procured or furnished by the DEVELOPER except as provided by the Architect/Engineer and compensated in Paragraph 7.1. 8.2.6 Cost. including transportation and maintenance of all materials. supplies. equipment. temporary facilities and hand tools not owned by the workers that are used or consumed in the performance of the Work, less salvage value andlor residual value; and cost less salvage value on such items used, but not consumed that remain the property of the DEVELOPER. 8.2.7 Rental charges of all necessary machinery and equipment, exclusive of hand tools owned by workers, used at the Worksite, whether rented from the DEVELOPER or Others, including installation, repair and replacement, dismantling, removal, maintenance, transportation and delivery costs. Rental from unrelated third parties shall be reimbursed at actual cost. Rentals from the DEVELOPER or its affiliates, subsidiaries or related parties shall be reimburses at the prevailing rates in the locality of the Worksite up to eighty-five percent (85%) of the value of the piece of equipment. 8.2.8 Cost of the premiums for all insurance and surety bonds which the DEVELOPER is required to procure or deems necessary, to conduct the business associated with the PROJECT. 8.2.9 Sales, use, gross receipts or other taxes, tariffs or duties related to the Work for which the DEVELOPER is liable. 8.2.10 Permits, fees, licenses, tests, royalties, damages for infringement of patents andlor copyrights, including costs of defending related suits for which the DEVELOPER is not responsible as set forth in Paragraph 3.7, and deposits lost for causes other than the DEVELOPER'S negligence. 8.2.11 Losses, expenses or damages to the extent not compensated by insurance or otherwise, and the cost of the corrective work andlor redesign during the Construction Phase and for a period of one year following the Estimated Date of Substantial Completion, provided that such corrective work andlor redesign did not arise from the negligence of the DEVELOPER. 8.2.12 All costs associated with establishing, equipping, operating, maintaining and demobilizing the field office. 8.2.13 Reproduction costs, photographs, cost of telegrams, facsimile transmissions, long distance telephone calls, data processing services, postage, express deliver PO BOX 1599, SAN BERNARDINO, CA 92402 Tete. 951.662.3872; Fax 909.335.9576 dUDreaililmsn.com 1211 OAR Initials AW A VCEDC Initials Page 23 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) charges, telephone service at the Worksite and reasonable petty cash expenses at the field office. 8.2.16 All water, power and fuel costs necessary for the Work. 8.2.17 Cost of removal of all non-hazardous substances, debris and waste materials. 8.2.18 Costs incurred due to an emergency affecting the safety of persons and/or property. 8.2.19 Legal, mediation and arbitration fees and costs, other than those covered by insurance arising from disputes between the Owner and the DEVELOPER, reasonably and properly resulting from the DEVELOPER'S performance of the Work. 8.2.20 All costs directly incurred in the performance of the Work or in connection with the PROJECT, and not included in the DEVELOPER'S Fee as set forth in Article 7, which are reasonably inferable from the Contract Documents as necessary to produce the intended resuits. 8.3 COST ITEMS FOR MARKETING AND SALE OF UNITS PHASE SERVICES 8.3.1 All costs directly incurred in the performance of the Work or in connection with the Marketing and Sale of each Unit, and not included in the DEVELOPER'S Fee as set forth in Article 7, which are reasonably inferable from the Contract Documents as necessary to produce the intended results. 8.4 DISCOUNTS All discounts for prompt payment shall accrue to the Owner and Developer jointly, and shall be included in the profits to be shared by the Owner and Developer. ARTICLE 9 CHANGES IN THE WORK Changes in the Work are within the general scope of this Agreement and may be accomplished, without invalidating this Agreement, by Change Order, Work Change Directive, or a minor change in the work, subject to the limitations stated in the Contract Documents. 9.1 CHANGE ORDER PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909-335.9576 dupreaiWmsn.com 1fJr;/ OAR Initials Ar() AVCEDC Initials Page 24 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 9.1.1 The DEVELOPER may initiate and/or the Owner, without invaiidating this Agreement. changes in the Work within the general scope of the Contract Documents consisting of additions, deletions or other revisions to the Amendments to this AGREEMENT or the estimated cost of the work, compensation for Design Phase Services, the DEVELOPER'S Fee and/or the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion being adjusted accordingly. All such changes in the Work shall be authorized by applicable Change Order, and shall be performed under the appiicable conditions of the Contract Documents. 9.1.2 Each Amendment to the AGREEMENT and/or estimated Cost of the Work resulting from a Change Order shall clearly separate the amount attributable to compensation for Design Phase Services, other Cost of the Work and the DEVELOPER'S Fee, with the DEVELOPER'S Fee not to exceed Ten percent (1Q.%). 9.1.3 The Owner and the DEVELOPER shall negotiate in good faith Amendments to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, the estimated Cost of the Work, compensation for Design Phase Services, the DEVELOPER'S Fee and/or the Estimated Date of Substantiai Completion and/or the Estimated Date of Final Completion and shall conclude these negotiations as expeditiousiy as possible. Acceptance of the Change Order and any Amendments to the Agreement, adjustment in the share of the profits after all expenses are paid, the estimated Cost of the Work, compensation for Design Phase Services, the DEVELOPER'S Fee and/or the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion shall not be unreasonably withheld. 9.2 WORK CHANGE DIRECTIVES 9.2.1 The Owner and the DEVELOPER shall negotiate expeditiously and in good faith for appropriate Amendments, as applicable, to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee, the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion, and if appropriate the compensation for Design Phase Services, arising out of Work Change Directives. As the changed work is completed, the DEVELOPER shall submit its costs for such work with the application for payment beginning with the next application for payment within thirty (30) days of the issuance of the Work Change Directive, and shall be paid for out of the PROJECT funds. 9.3 MINOR CHANGES IN THE WORK PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duorea@msn.com 9.3.1 The DEVELOPER may make minor changes in the design and construction of the PROJECT consistent with the intent of the Contract Documents which do not involve an amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee, the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion, and do not materially and adversely affect the design of the PROJECT, the quality of any of the I{J/ RIT7f) OAR Innlals AVC:O~ V Page 25 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) materials or equipment specified in the Contract Documents, the performance of any materials, equipment or systems specified in the Contract Documents, or the quality of workmanship required by the Contract Documents. 9.3.2 The DEVELOPER shall promptly inform the Owner in writing of any such changes and shall record such changes on the DEVELOPER Documents maintained by the DEVELOPER. 9.4 UNKNOWN CONDITIONS If in the performance of the Work the DEVELOPER finds latent, concealed or subsurface physical conditions which are materially different from the conditions the DEVELOPER reasonably anticipated, or if physical conditions are materially different from those normally encountered and generally recognized as inherent in the kind of work provided for in this Agreement, then an Amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee, the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion, and if appropriate the compensation for Design Phase Services, shall be equitably adjusted by Change Order within a reasonable time after the conditions are first observed. The DEVELOPER shall provide the Owner with written notice within the time period set forth in Paragraph 9.6. 9.5 DETERMINATION OF COST 9.5.1 CLAIMS FOR ADDITIONAL COST OR TIME For any claim for an increase in PROJECT Costs as a result of an Amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee and the Estimated Date of Substantiai Completion and/or the Estimated Date of Final Completion, and if appropriate the compensation for Design Phase Services, the DEVELOPER shall give the Owner written notice of the claim within twenty-one (21) days after the occurrence giving rise to the claim or within twenty-one (21) days after the DEVELOPER first recognizes the condition giving rise to the claim, whichever is later. Except in an emergency, notice shall be given before proceeding with the Work. Claims for design and estimating costs incurred in connection with possible changes requested by the Owner, but which do not proceed, shall be made in writing within twenty-one (21) days after the decision is made not to proceed. Any change including but not limited to the Amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee, the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion, and if appropriate the compensation for Design Phase Services, resulting from such claim shall be authorized by Change Order. 9.6 EMERGENCIES In any emergency affecting the safety of persons and/or property, the DEVELOPER shall act, at its discretion, to prevent threatened damage, injury or loss. Any change in the PROJECT Costs as a result of an Amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, PO BOX 1599, SAN BERNARDINO, CA 92402 ~'/ I Tele. 951.662.3872; Fax 909.335.9576 /)/. dUDrealiilmsn.com OA Initial~ ArIJ AvfEDC Initials Page 26 . ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) estimated Cost of the Work, the DEVELOPER'S Fee and the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion, and if appropriate the compensation for Design Phase Services, on account of emergency work shall be determined as provided in this Article. A written notice will be provided to the owner within 14 days. 9.7 CHANGES IN LAW In the event any changes in laws or regulations affecting the perfonmance of the Work are enacted after either the date of this Agreement or the date an Amendment to the AGREEMENT is accepted by the Owner and set forth in the Amendment to this Agreement, whichever occurs later, the Amendment to this AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee and the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion, and if appropriate the compensation for Design Phase Services, shall be equitably adjusted by Change Order. ARTICLE 10 PAYMENT FOR CONSTRUCTION PHASE SERVICES 10.1 PROGRESS PAYMENTS 10.1.1 On the Twentieth (2ol!l~of each month after the Construction Phase has commenced, the DEVELOPER shall submit to the Owner an application for payment consisting of the Cost of the Work perfonmed up to the Twentieth (20!!ll.Q2y of the month, including the cost of all material suitable stored on the Worksite or at other locations approved by the Developer, along with a 10% DEVELOPER'S Fee. Approval of payment applications for such stored materials shall be conditioned upon submission by the DEVELOPER of bills of sale and applicable insurance or prior to submission of the next application for payment, the DEVELOPER shall fumish a copy to the Owner a statement accounting for the disbursement of funds received under the previous application. 10.1.2 Within ten (10) days after receipt of such application, the DEVELOPER Shall be paid the appropriate amount for which application for payment is made, less amounts if any previously paid. 10.1.3 If the Owner has not paid the DEVELOPER at the time payment of any amount becomes due, then the DEVELOPER may, at any time thereafter, upon serving written notice that the Work will be stopped within seven (7) days after receipt of the notice by the Owner, and after such seven day period, stop the Work until payment of the amount owing has been recovered. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 . duprea((!!msn,com I!~ OAR 1m ials AVCEdJ:D Page 27 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c){3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 10.1.4 Payments due but unpaid pursuant to Sub-paragraph 10.1.2, less any amount retained pursuant to Paragraphs 10.2 and 10.3 may bear interest from the date payment is due at the prime rate prevailing at the place of the PROJECT. 10.1.5 The progress-payment, Owner's occupancy or use of the PROJECT, whether in whole or in part, shall not be deemed an acceptance of any Work not conforming to the requirements of the Contract Documents. 10.1.6 Upon Substantial Completion of the Work, the DEVELOPER shall be paid the unpaid balance of the Cost of the Work, compensation for Design Phase Services and the DEVELOPER'S Fee, less fifteen percent (15%) of the cost of completing any unfinished items as agreed to between the Owner and the DEVELOPER as to extent and time for completion. The Developer thereafter shall be paid the Developer's monthly fee for the amount retained for unfinished items as each item is completed. 10.2 RETAINAGE No retainage shall be withheld for each progress payment. 10.3 Left Blank for Future Use. 10.4 FINAL PAYMENT 10.4.1 Final Payment, consisting of the unpaid balance of the Cost of the Work, compensation for Design Phase Services, DEVELOPER'S Fee, reimbursement of DEVELOPER Loan Funds and Percentage of profits after all expenses are paid, shall be due and payable when the work is fully completed. Before issuance of final payment, the Owner may request satisfactory evidence that all payrolls, material bills and other indebtedness connected with the Work have been paid or otherwise satisfied. 10.4.2 In making final payment the Owner waives all claims except for: .1 outstanding liens; .2 improper workmanship or defective materials appearing within one year after the Estimated Date of Substantial Compietion; .3 work not in confonmance with the Contract Documents; and .4 terms of any special warranties required by the Contract Documents. 10.4.3 In accepting final payment, the DEVELOPER waives all claims except those previously made in writing. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 dupreallilmsn.com OAl1a(l MD AVCEDC Initials Page 28 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ARTICLE 11 INDEMNITY, INSURANCE, AND WAIVER OF SUBROGATION 11.1 IDEMNITY 11.1.1 To the fullest extent permitted by law, the DEVELOPER shall defend, indemnify and hold harmless the Owner, the Owner's officers, directors, members, consultants, agents and employees from all claims for bodily injury and property damage (other than to the Work itself and other property required to be insured under Paragraph 11.5 owned by or in the custody of the owner), that may arise from the performance of the Work, to the extent of the negligence attributed to such acts or omissions by the DEVELOPER, Subcontractors or anyone employed directly or indirectly by any of them or by anyone for whose acts any of them may be liable. The DEVELOPER shall not be required to defend, indemnify or hold harmless the Owner, the Owner's officers, directors, members, consultants, agents and employees for any acts, omissions or negligence of the Owner, the Owner's officers, directors, members, consultants, employees, agents or separate contractors. 11.1.2 To the fullest extent permitted by law, the Owner shall defend, indemnify and hold harmless the DEVELOPER, its officers, directors or members, Subcontractors or anyone employed directly or indirectly by any of them or anyone for whose acts any of them may be liable from all claims for bodily injury and property damage, other than property insured under Paragraph 11.5, that may arise from the performance of work by Others, to the extent of the negligence attributed to such acts or omissions by Others. 11.2 DEVELOPER'S LIABILITY 11.2.1 The DEVELOPER shall obtain and maintain insurance coverage in accordance with the Redevelopment Agency (the "Agency") of the City of San Bernardino's "2006 AFFORDABLE SINGLE FAMILY HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT - FOUR AGENCY LOTS". 11.4 OWNER'S L1ABIL TY INSURANCE The Owner shall be listed as an additional named insured on the Developers insurance policies required by the Redevelopment Agency (the "Agency") of the City of San Bernardino's "2006 AFFORDABLE SINGLE FAMILY HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT - FOUR AGENCY LOTS". 11.4.1 The Owner may at its own expense obtain additional insurance other than what is provided by the Developer and shall name the Developer as an additional named insured on all additional policies obtained. The cost for this additional insurance shall not be included in the overall PROJECT costs PO BOX 1599, SAN BERNARDINO, CA 92402 Tele, 951.662.3872; Fax 909.335.9576 duprea@msn.com oAel ArD AVCEDC Inrrials Page 29 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 11.5 INSURANCE TO PROTECT PROJECT 11.5.1 The Deve/oper shall obtain and maintain insurance in accordance with the Redevelopment Agency (the "Agency") of the City of San Bernardino's "2006 AFFORDABLE SINGLE FAMILY HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT - FOUR AGENCY LOTS". 11.6 WAIVER OF SUROGATION 11.6.1 The Owner and the DEVELOPER waive all rights against each other, the ArchitecUEngineer, and any of their respective employees, agents, consultants, Subcontractors, Material Suppliers and Sub-subcontractors for damages covered by the q, CLe~5 insurance provided pursuant to Paragraph 11.5 to the extent that they may have\to the proceeds of such insurance held by the DEVELOPER as trustee. The DEVELOPER shall require similar waivers from the ArchitecUEngineer and all Subcontractors, and shall require each of them to include similar waivers in their sub-subcontracts and consulting agreements. 11.6.2 The Owner waives subrogation against the DEVELOPER, the ArchitecUEngineer, Subcontractors, Material Suppliers and Sub-subcontractors on all property and consequential/oss policies carried by the Owner on adjacent properties and under property and consequential loss policies purchased for the PROJECT after its completion. 11.6.3 The Policies shall also be endorsed to state that the carrier waives any right of subrogation against the DEVELOPER, the ArchitecUEngineer, Subcontractors, Material Suppliers, or Sub-subcontractors. 11.7 MUTUAL WAIVER OF CONSEQUENTIAL DAMAGES The Owner and the DEVELOPER agree to waive all claims against the other for all consequential damages that may arise out of or related to this Agreement. The Owner agrees to waive damages including but not limited to the Owner's loss of use of the Property, all rental expenses incurred, loss of services of employees, loss of business, loss of financing, principal office overhead and profits, lost of profits not related to this PROJECT, or loss of reputation. The DEVELOPER agrees to waive damages including but not limited to the loss of business, loss of financing, principal office overhead and profits, loss of profits not related to this PROJECT, or loss of reputation. This paragraph shall not be construed to preclude contractual provisions for liquidated damages when such provisions relate to direct damages only. The provisions of this paragraph shall govern the termination of this Agreement and shall survive such termination. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662-3872; Fax 909.335.9576 duprea@msn.com (d( A Initials M1J AVCEDC Initials Page 30 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON.PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ARTICLE 12 SUSPENSION AND TERMINATION OF THE AGREEMENT 12.1 SUSPENSION 12.1.1 The Owner may not order the DEVELOPER verbally or in writing to suspend, delay or interrupt all or any part of the Work without cause for any such period of time as the Owner may determine to be appropriate for its convenience. 12.2 TERMINATION BY OWNER Any Event of Default on the part of the DEVELOPER, as defined under the City of San Bemardino Redevelopment Agency Affordable Single Family Housing Disposition and Development Agreement shall also constitute a material breach of this agreement, and except as may otherwise be agreed upon in writing signed by the relevant parties, the termination of the above-referenced agreement shall also result in the simultaneous termination of this agreement. 12.3 TERMINATION BY THE DEVELOPER 12.3.1 Upon five (5) days written notice to the Owner, the DEVELOPER may terminate this Agreement for any of the following reasons: .1 if the Work has been stopped for a sixty (60) day period a. under court order of other governmental authorities having jurisdiction; or b. as a result of the declaration of a national emergency of other govemmental act during which, through no act or fault of the DEVELOPER, materials are not available; .2 if the Work is suspended by the Owner for sixty (60) consecutive days; 12.3.2 If the Owner has for thirty (30) days failed to pay the DEVELOPER pursuant to Sub-paragraph 10.1.2, the DEVELOPER may give written notice of its intent to terminate this Agreement. If the DEVELOPER does not receive payment within five (5) days of giving written notice to the Owner, then upon five (5) days' additional written notice to the Owner, the DEVELOPER may terminate this Agreement. 12.3.3 Upon termination by the DEVELOPER in accordance with this Sub-paragraph, the DEVELOPER shall be entitled to recover from the Owner payment for all Work executed and for all proven loss, cost or expense in connection with the Work, plus all ~tL. OAR Inrtia s AVC&!O PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea@msn.com Page 31 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) demobilization costs and actual damages. In addition, the DEVELOPER shall be paid an amount calculated as set forth either in Sub-paragraph 12.3.1 or 12.3.2, depending on when the tennination occurs, and Sub-paragraph 12.3.3. ARTICLE 13 DISPUTE RESOLUTION 13.1 WORK CONTINUANCE AND PAYMENT Unless otherwise agreed in writing, the DEVELOPER shall continue the Work and maintain the approved schedules during all dispute resolution proceedings. If the DEVELOPER continues to perform, the Owner shall continue to make payments in accordance with the Agreement. 13.2 INITIAL DISPUTE RESOLUTION If a dispute arises out of or relates to this Agreement or its breach, the parties shall endeavor to settle the dispute first through direct discussions. If the dispute cannot be settled through direct discussions, the parties shall endeavor to settle the dispute by mediation under the Construction Industry Mediation Rules of the American Arbitration Association before recourse to the dispute resolution procedures contained-in this Agreement. The 10caUon of the mediation shall be the same city that contains the location of the PROJECT. Once one party files a request for mediation with the other contracting party and with the American Arbitration Association, the parties agree to conclude such mediation within sixty (60) days of filing of the request. Either party may tenninate the mediation at any time after the first session, but the decision to terminate must be delivered in person by the party's representative to the other party's representative and the mediator. 13.3 DISPUTE RESOLUTION If the dispute cannot be settled by mediation within sixty (60) days, the parties shall submit the dispute to any dispute resolution process set forth in Exhibit No.1 to this Agreement. 13.4 MULTIPARTY PROCEEDING The parnes agree that all parties necessary to resolve a claim shall be parties to the same dispute resolution proceeding. Appropriate provisions shall be included in all other contracts relating to the Work to provide for the consolidation of such dispute resolution proceedings. 13.5 COST OF DISPUTE RESOLUTION All parties shall bear the costs of their own legal fees, but shall equally share any mediation fees and costs. The prevailing party in any dispute resolution arising out of or relating to this Agreement or its breach that is resolved by the dispute resolution process set forth in Exhibit Number. 1 to this Agreement shall be entitled to recover from the other party those reasonable attomey's fees, costs and expenses incurred by the prevailing party in connection with such dispute resolution process after direct discussions and mediation. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duorea@msn,conf oil' 4fO AVCEDC Innials Page 32 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c){3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 13.6 LIEN RIGHTS Nothing in this Article shall limit any rights or remedies not expressly waived. which either party may have under the law. ARTICLE 14 MISCELLANEOUS PROVISIONS 14.1 ASSIGNMENT Neither the Owner nor the DEVELOPER shall assign its interest in this Agreement without the written consent of the other except as to the assignment of proceeds. The terms and condition of this Agreement shall be binding upon both parties, their partners. successors, assigns and legal representatives. Neither party to this Agreement shall assign the Agreement as a whole without written consent of the other except that the Owner may assign the Agreement to a wholly -owned subsidiary of the Owner when the Owner has fully indemnified the DEVELOPER or to an institutional lender providing construction financing for the PROJECT as long as the assignment is no less favorable to the DEVELOPER than this Agreement. In the event of such assignment. the DEVELOPER shall execute all consents reasonably required. In such event, the wholly owned subsidiary or lender shall assume the Owner's rights and obligations under the Contract Documents. If either party attempts to make such an assignment, that party shall nevertheless remain legally responsible for all obligations under the Agreement. unless otherwise agreed by the other party. 14.2 GOVERNING LAW This Agreement shall be governed by the law in effect at the location of the PROJECT of the State of California. 14.3 SEVERABILITY The partial or complete invalidity of anyone or more provisions of this Agreement shall not affect the validity or continuing force and effect of any other provision. 14.4 NO WAIVER OF PERFORMANCE The failure of either party to insist. 'in anyone or more instances, on the performance of any of the terms, covenants or conditions of this Agreement, or to exercise any of its rights shall not be construed as a waiver or relinquishment of such term, covenant, condition or right with respect to further performance. 14.5 TITLES AND GROUPINGS The titles to the articles of this Agreement are for ease of reference only and shall not be relied upon or cited for any other purpose. The grouping of the articles in this Agreement and of the Owner's specifications under the various headings is solely for the purpose of provisions, the use of paragraphs or the use of headings be construed to limit or alter the meaning of any provisions. 14.6 JOINT DRAFTING The parties to this Agreement expressly agrees that this Agreement was jointly drafted, and that both had opportunity to negotiate its terms and to obtain the assistance of counsel in reviewing its terms prior to execution. Therefore, the PO BOX 1599, SAN BERNARDINO, CA 92402 ~' / / A~ Tele. 951.662.3872; Fax 909.335.9576 . fl. A'( 1/ duprea@msn.com OAR Initi Is AVCEDC Initials Page 33 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Agreement shall be construed neither against nor in favor of either party. but shall be construed in a neutral manner. 14.7 RIGHTS AND REMEDIES The parties' rights. liabilities. responsibilities and remedies with respect to this Agreement. whether in contract. tort. negligence or otherwise. shall be exclusively those expressly set forth in this Agreement. 14.8 OTHER PROVISIONS PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprealOlmsn.com Ail o Initials )rt7D AVCEDC In~ials Page 34 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ARTICLE 15 EXISTING CONTRACT DOCUMENTS The Contract Documents in existence at the time of execution of this Agreement are as follows: 1. DESIGN BUILD AGREEMENT FOR DEVELOPMENT SERVICES, dated: May 10,2005, which is superceded by this Development Agreement. 2. Change of Owners Authorized Representative (OAR), dated November 16, 2005 3. As defined in Sub-paragraph 2.4.1, the following Exhibits are a part of this Agreement: EXHIBIT NO.1 Dispute Resolution menu, EXHIBIT NO.2 Change of Owners Authorized Representative (OAR), dated November 16, 2005 This Agreement is entered into as of the date entered in Article 1. ATTEST: 3!3~~ . OWNER: Inland Em ire Concerned African American C BY: PRINT NAME: Owusu Hodari PRINT TITLE: Owners Authorized Representative DEVELOPER: Arro 0 Valle ATTEST: '3/-;106 BY: PRINT NAME: Antonio F. Dupre Sr PRINT TITLE: PresidentJ CEO OAe/ AP1? AVCE()C Initials PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335-9576 dUDrea(li!msn.com Page 35 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Exhibit No.1 Dated lAc... '({-"I\. '3 :,'2-00-6 DISPUTE RESOLUTION MENU Pursuant to Paragraph 13.3, if neither direct discussions nor mediation successfully resolves the dispute, the parties agree that the following shall be used to resolve the dispute: Dispute Review Board The Dispute Review Board is composed of one member selected by the Owner, one selected by the DEVELOPER and a third member selected jointly by the Owner and DEVELOPER This Board shall be selected before the time for construction commences, shall meet periodically, and shall make advisory decisions, which may be introduced into evidence at any subsequent dispute resolution process. If a Dispute Review Board is selected, it is understood its review will precede mediation. Litigation Action may be filed in the appropriate state or federal court located in the jurisdiction in whiCh the PROJECT is located. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335-9576 duprea@msn,com 1J4 OAR Initials 4m A VCEDC Initials Page 36 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMu'AITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Exhibit No.2 Dated: --:f'^-q,YLV-- ") I~PO-6 Change of Owners Authorized Representative (OAR), dated November 16, 2005 PO BOX 1599, SAN BERNARDINO, CA 92402 Tete. 951-662.3872; Fax 909.335.9576 dupreatlllmsn.com ~/1 o Rlnttfals ~ A VCEDC Initials Page 37 - ',,;' ~."'\:_; .... ,-',' ,-..,':- ,,' ",,,,",'./'~-"'-':',; '-- "" - ,.', " Bnlald.lmpire Concerned Alrjc:a~-AmlriaJDCIIIRb@BS 1777 W. Baseline * San Bernardino;,CA92411 * .(909)6630185 P.O. Box ?OO~6 Slin Be~RlinIbo,CA924iC . ..... .' .' " -',.' , ""-ii . ", Dear Tony Dupre Sr" ,,;,,: .,,:,,;;.. , ,:':,-" :',_ _ .-' - .. -, -::. _ :;:.::.~:'::r:j:{.~,_L:~;,t: ~';.i_:}/Jl;\;,;-:;:~~:;!i~;;';:!,;~'>':";':i<_:'.'::,';h~i:~:." , _ ,_" ,/:: , This:Ietter iisto;infcirin .you tliat,p,astoi: OWtisu', . m'2;e . . 0 ri;i:>resent,1h IECMC(iniahdEmpu-e:C~iicemedAfficart,ARI , .'ur~~~~)~n 1:I)is proj~bt.H!;\ selWes in the capacity .oftheECoiioniicTleve1epnlenf'Cliaii'erson;'i':' "',: ::':' ':":.', ,', . -' ''',_ '. '_ ?," ;,'- ..: _ _',." ,;.,.::;,::.;:, 'i',:<.~:'~.;;;~::f -'.;',:'J:,:~;~~' ,':':-::' ,_~;:,:':::~'~i':__j\;~::(:~S,,;,"~:}~,::;~,::~;~,~~~;{~~_~rl;, ' i);a*;~:f;;i;:':::~.;;" :<:_:'~;::;~<~i~~.U~~~~}~';:':~.;,::' c' lfyouhave any quesfi~~;please f~e1i~eeto c~lI ;n~[, 6~~Qi~8:r am,thadJ?ng Y~l;Jor work'iiig ,~tfrti$:~~'~~m'i\oj'~t:,::~:\~n.:?~:rft:'1~:);JS!;',~;'~<,it:,';r:._".,~>.':'~" ":,~',"~"'.'\.:;,'. .','~ ' \ );>.,..' '~,I :.: . :~'. ~"," '~i' .-.,," ';:.t',~>,. ,-, '.~ ''', ::::-~'.'" ~. ':~~i:;'l~?~~;::f<f:'~-:' "''''_ ,':' ".-: ':,',1.; , '", ;-',:,,' .'-" '. ";-':::'-";::;-~:"/;,:'.,~':. ' " _; 1,,,<.,,,:. ,..," ,>! ~,.-:,-> : ' ',' ;_,::; , _ I', .:,<~.~,_'_:, ".!. 'i~ :':;e;.', ,",' :",c.:, '-<'i' :,;",:,;>' ,>",;,.,," "'d", '''-':, ,.-.', <,'" ,,~ '" ",j U1C?AAC. ~~, ~: , ." . . November16;2005 . ;,', }::'_ J,~'~~tiA;lll~~~~ _' '," i.' .. ECCtEslA"CiiRIS1lAN FEllOWSHIP' ;:;, ,SAN B"!lNARoINQ, GA ;',' ',"', ,., '::-';;"-."_';1-,:",-,:" 2ND, :vic~ CHAmMAN; . REGINAJ;J)'inEllION .. HOLY:i:AND,C.O:G,I.C, {.. SAN' "'u. '!P'. ' 'ii, .- it<'.- ~. . ,t~y.,.c,.: ti;::.t,~' , ,. ~ 'Ii :SECRET ARY: ~; :';c~~~~~~~;~~~NS. '" RIA"l:lI,.CA, , __ ~,~/'~'; ,;.::~; )>'~::,;f\-:,":' ,,--"..; ,', ~~(\:"".Y;' fj ;f< ,\:~.., ASSlimwr(['RE~URER: , ,:' ,.GI;ORlJ\.,ARRlNGTON DOOR O/i.FAll#HOPE;& CHARITY .:; .. SAN BERNARDINO, CA' . :< ' Turner, lECAA:C'sChairperson :.. . ',- ',,'. ;~c ' ':,' '.'- '->.' -' ,,' ;',--.-.,', -- :: tJ:;:!',:J~ARljMENTAR1~N;:',,:.. " l;, '\." 1l111L!V'llOHA:i'fflON ):.) CHRISTJEMI'l1,C:M.E. CHURCH " SAN BERNARCI~m,GA . " ';'''':, ,..':',~~:;,'j-;';;;\':-,''':~,~'''' ,,''', BOARDMEMBER. DISH 1: , 'IR"'lN,pERnV, . ~~.,,~~g~:~*q.' . ;[.:-,,~~: l'VI ~;BC? 'F ' R~~~~;1l ,; ,''';AU:'''~OOLE:UNIli''BAPTIST ~~;:j__ :REq~~~;~,~:.~~~;t::'~;;:i'{'-"":': -)::,:.', .JlGARD'MEMBEil';DISTRICT /14 'v ' ": '--GWUSl:I1HOOARF: ;.-, " PREOESTlN IN CHRIST CHURCH ONTARIO. CA ' BOARn'MBR. 'RlVJJRSIDE DlST. . , JAME!;'FJIA'N1WN 'NEVI COVfNANT:BIBlE CHURCH, -MORENOVAIiEY, CA ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Dated f'A- Exhibit No.3 CA.. y c h '7 /2..-0 () .(; , Conceptual Sources & Uses Proforma PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662-3872; Fax 909-335-9576 duprea@msn.com OAt.1 ~ A VCEDC Inilials Page 38 ! ~ ~ N w_ ~NO N~O w~~ ON N~ "8~ i15~~ r-:N ~ *~-~-----------~ o o ~ oj O~O o~o ~~o N~:if 000 000 co 001t) .., oom 0; M~ ~ N ~ ---------------.,.. .. 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'" rc o it PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea@msn.com /) OAR Inrtials AVCEDC Initials ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) AMENDMENT NO.1 Pursuant to Paragraph 3.2 of the Agreement dated Between the Owner, Inland Em ire Concerned A rican American Churches and the DEVELOPER, Arro 0 Va lie Comm Corporation /;~ for Wests ide Homes PROJECT ~i velopment) Assessors Parcel Number's: 0144-131-21; 0144-131-36; 0144- 6; 144-123"()3 (4 specific lots), San Bernardino. CA 92411 (~h PRO C , the Owner and the Devel e sire to establish an Amendment to the Agreement for the WOO. '''''.,~~'' "" DmCO"R "_,, '"'~ ARTICLE 1 PROFIT SHARING The DEVELOPER'S PROFIT SHARING AGREEMENT for the Work, including the Cost of the Work as defined in Article 8 and as set forth in Paragraph 2.1, is Dollars ($ The AGREEMENT is for the performance of the WorK in accordance with the documents listed below, which are part of the Agreement. Page 39 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Drawings and Specifications, including Addenda, if any, dated_ , _pages. APPENDIX_ Allowance Items, dated pages. APPENDIX_ Assumptions and Clarifications, dated pages. APPENDIX_ Schedule of Work, dated pages. APPENDIX_ Alternate Prices, dated pages. APPENDX_ Unit Prices, dated pages. APPENDIX_ Additional Services included, dated pages. APPENDIX_ APPENDIX The 2006 City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement, dated _ pages. ARTICLE 2 ESTIMATED DATE OF SUBSTANTIAL COMPLETION The Estimated Date of Substantial Completion of the Work is . ARTICLE 3 ESTIMATED DATE OF FINAL COMPLETION PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.66N872; Fax 909.335.9576 dUDrea@msn,com OAR Initials AVCEDC Innials Page 40 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) The Estimated Date of Final Completion of the Work is: or within ) days after the Estimated Date of Substantial Completion, subject to adjustments as provided for in the Contract Documents. This Amendment is entered into as of OWNER: Inland Empire Concerned African American Churches ATTEST: BY: PRINT NAME: Owusu Hodari PRINT TITLE: Owners Authorized Representative DEVELOPER: Arrovo Vallev Communitv Economic Development Corporation ATTEST: BY: PRINT NAME: Antonio F. Dupre Sr PRINT TITLE: Presidentl CEO PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea@msn.com OAR Initials AVCEDC Initials Page 41 EXHIBIT "F" CERTIFICATE OF COMPLETION .15 20 EXHIBIT "F" CERTIFICATE OF COMPLETION WHEN RECORDED, MAIL TO: Arroyo Valley Community Economic Development Corporation Attn.: Antonio Dupre, Sr., President P.O. Box 1599 San Bernardino, California 92402 (Space Above Line For Use By Recorder) CERTIFICATE OF COMPLETION I, , the Secretary of the Redevelopment Agency of the City of San Bernardino (the "Agency") hereby certify as follows: Section I. The improvements required to be constructed in accordance with that certain 2006 Affordable Single-Family Disposition and Development Agreement (HOME Funds - Four Agency Lots) (the "Agreement") dated November 20, 2006, by and among the Agency and Arroyo Valley Community Economic Development Corporation, a California non-profit benefit corporation, and an approved Community Housing Development Organization ("CHDO"), and the Inland Empire Concerned African American Churches, a California non-profit corporation (collectively, the "Developer"), on Assessor's Parcel Number 0144-131-21, Assessor's Parcel Number 0144-131-36, Assessor's Parcel Number 0144-123-03 and Assessor's Parcel Number 0144-123-46 (collectively, the "Property") more fully described in Exhibit "A" attached hereto and incorporated herein by this reference has been completed in accordance with the provisions of said Agreement. The Agreement or a memorandum thereof is recorded at of the Official Records of San Bernardino County, California. Section 2. This Certificate of Completion shall constitute a conclusive determination of satisfaction of the agreements and covenants contained in the Agreement with respect to the obligations of the Developer, and its successors and assigns to construct and develop the Project (as defined in the Agreement), excluding any minor building "punch-list" items, and including any and all buildings and any and all parking, landscaping and related improvements necessary to support or which meet the requirements applicable to the Project and its use and occupancy of the Property, whether or not said improvements are on the Property or on other property subject to the Agreement, all as described in the Agreement, and to otherwise comply with the Developer's obligations under the Agreement with respect to the Property and the dates for the beginning and completion of construction of improvements thereon under the Agreement. The Agreement or any memorandum thereof recorded as referenced above is released and no longer shall affect, burden or be binding on the Property or the .15 21 Developer or its successors and assigns. However, this Certificate of Completion shall not affect the rights of the Agency to enforce any covenant in the Grant Deed of a Public Agency and Affordable Single Family Housing Development, Use and Occupancy Conditions, Covenants and Restrictions pursuant to which the Property was conveyed under the Agreement. Said Agreement is an official record of the Agency and a copy of said Agreement may be inspected in the office of the Secretary of the Redevelopment Agency of the City of San Bernardino located at 201 North "E" Street, Suite 301, San Bernardino, California, during regular business hours. Section 3. The Property to which this Certificate of Completion pertains is more fully described in Exhibits "A" attached hereto. DATED AND ISSUED this day of ,200_. By: , Executive Director Redevelopment Agency of the City of San Bernardino .15 22 EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTNE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19, 19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 23 EXHIBIT "G" MEMORANDUM OF AGREEMENT .15 24 EXHIBIT "G" MEMORANDUM OF AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, CA 9240 I Recording Fee Exempt Pursuant to Government Code Section 6103 (Space Above Line Reserved for Use By Recorder) MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT (this "Memorandum") is dated as of November 20, 2006, by and among the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"), and Arroyo Valley Community Economic Development Corporation ("Arroyo"), a California non-profit benefit corporation, and an approved Community Housing Development Organization ("CHDO"), and the Inland Empire Concerned African American Churches (the "Participant"), a California non-profit corporation (Arroyo and the Participant shall collectively be referred to as the "Developer"). I. Agreement. The Agency and the Developer entered into that certain 2006 Affordable Single-Family Disposition and Development Agreement (HOME Funds - Four Agency Lots) (the "Agreement") dated November 20, 2006, for the purpose of providing for the purchase, construction and development by the Developer of real property consisting of land located in the City of San Bernardino, County of San Bernardino, California (as more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference), Assessor's Parcel Number 0144-131-21, Assessor's Parcel Number 0144-131-36, Assessor's Parcel Number 0144-123-03 and Assessor's Parcel Number 0144-123-46 (the "Property"). 2. Incorporation of Agreement. This Memorandum is for informational and notice purposes only and nothing contained herein shall be deemed to in any way modify or otherwise affect any of the provisions of the Agreement. This Memorandum is subject to all of the provisions of the Agreement and in the event of any inconsistency between the provisions of the Agreement and this Memorandum, the provisions of the Agreement shall prevail. 3. Counterparts. This Memorandum may be executed in any number of counterparts, each of which shall constitute an original and all of which shall constitute but one and the same document. .15 25 IN WITNESS WHEREOF, the undersigned have executed this Memorandum of Agreement as of the day and year first above written. DEVELOPER Arroyo Valley Community Economic Development Corporation, a California non-profit benefit corporation Dated: By: Its: Inland Empire Concerned African American Churches, a California non-profit corporation By: Date: Its: Name: By: Its: Name: AGENCY Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic Date: By: Maggie Pacheco, Executive Director Approved as to Form and Legal Content: By: Agency Counsel [ALL SIGNATURES MUST BE NOTARIZED] .15 26 EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19, 19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 27 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS - FOUR AGENCY LOTS) by and among Redevelopment Agency ofthe City of San Bernardino, a public body, corporate and politic ("Agency") and Arroyo Valley Community Economic Development Corporation ("Developer"), a California non-profit benefit corporation and Inland Empire Concerned African American Churches ("Participant"), a California non-profit corporation Vacant Parcels (APN: 0144-131-21 and 36) Vacant Parcels (APN: 0144-123-03 and 46) ~2'8 1\- ZO.O(.o 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS - FOUR AGENCY LOTS) THIS 2006 AFFORDABLE SINGLE-FAMILY DISPOSITION AND DEVELOPMENT AGREEMENT (HOME FUNDS - FOUR AGENCY LOTS) (this "Agreement") is dated as of November 20, 2006, by and between the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"), and Arroyo Valley Community Economic Development Corporation (the "Developer"), a California non-profit benefit corporation, and an approved Community Housing Development Organization ("CHDO"), and the Inland Empire Concerned African American Churches (the "Participant"), a California non-profit corporation. The Agency, the Developer and the Participant are each sometimes referred to herein as a "party" and collectively are referred to herein as the "parties". This Agreement is entered into with respect to certain facts as presented in the following Recitals: - RECITALS - (a) The Agency owns the four (4) vacant parcels ofland as listed below and as more specifically described in Exhibit "A", attached hereto and incorporated herein by reference (the "Agency Lots"). AGENCY LOTS Vicinity and Condition of Agency Lot APN Number 16th and Harris Streets, San Bernardino, CA (Vacant Lot) 17th and "]" Streets, San Bernardino, CA (Vacant Lot) 17th and "]" Streets, San Bernardino, CA (Vacant Lot) 17th and "I" Streets, San Bernardino, CA (Vacant Lot) 0144-131-21 Approximate Size of Agency Lot 6,750 sq. ft 0144-131-36 6,750 sq. ft 0144-123-46 6,750 sq. ft 0144-123-03 6,750 sq. ft The Agency, pursuant to the terms of this Agreement, plans to convey and transfer fee simple title to the Agency Lots to the Developer and to the Participant as joint tenants to allow the Developer and the Participant to construct the Project as described in Recital (b) below. (b) The Developer and the Participant desire to construct homes with three (3) bedrooms, two (2) bathrooms which will be not less than approximately 1,300 square feet in size and a 400 square foot attached two (2) car garage single-family affordable housing unit on each of the Agency Lots (the "Project"); and (c) [RESERVED - NO TEXT]; and .15 I (d) The Participant has obtained a loan from an institutional lender (which loan has been guaranteed by the Developer) the proceeds of said loan (together with the HOME funds to be provided to the Developer pursuant to this Agreement under Title 24 Code of Federal Regulations ("CFR") Part 92)) shall be used to permit the Developer and the Participant to construct, develop and implement the Project in accordance with the terms, covenants and conditions of this Agreement; and (e) The Agency, through the City of San Bernardino, receives annual federal funds under the Home Investment Partnership Act ("HOME Program"), from the United States Department of Housing and Urban Development ("HUn") in order to carry out eligible activities of the Agency in accordance with federal program regulations set forth in 24 CFR Part 92; and (f) In accordance with the HUD guidelines under the HOME Program, HOME funds may be used for locally based non-profit housing entities to carry out affordable housing activities in compliance with the HOME Program regulations; and (g) In accordance with the HOME Program requirements, not less than fifteen percent (15%) of HOME funds must be set aside for locally based non-profit entities known as Community Housing Development Organizations (and defined herein as a "CHDO") to carry out affordable housing opportunities for low-income households; and (h) The Agency has designated the Developer as a CHDO, as this term is defined in 24 CFR Part 92.300, and the Developer desires to participate with the Agency in activities that are eligible under the HOME Program, and the Developer further agrees that the beneficiaries of its activities under the HOME Program and this Agreement will be for the benefit of low income families and persons who meet the income eligibility guidelines of24 CFR Part 92.216 and Part 92.217; and (i) The Agency's participation in the Project is limited to the transfer of the Agency Lots to the Developer and to the Participant for the construction by the Developer and by the Participant of four (4) single-family New Homes (as defined below) to be sold by the Developer and by the Participant to Qualified Homebuyers; and (j) Each Qualified Homebuyer shall also covenant to the Agency that the New Home shall be used and occupied as the principal residence of the Qualified Homebuyer for forty-five (45) years following the date of initial occupancy of the New Home by the Qualified Homebuyer; and (k) Both the Developer and the Participant shall have the responsibility to inform a potential Qualified Homebuyer of the requirement that the Qualified Homebuyer shall be required to execute a recordable covenant restricting the use and occupancy of each "New Home" in accordance with the Agency program and the development goals and objectives, including, but not limited to, recital (j), above; and (I) Both the Developer and the Participant shall further have the responsibility for the marketing and the sale of each Completed New Home at a maximum purchase price for the .15 2 Completed New Home (including the applicable Agency Lot) that does not exceed ninety-five percent (95%) of the median purchase price for the areas as set forth at 24 CFR Part 92.254(a)(2)(iii); and (m) The Developer and the Participant are responsible for the construction of the Project at their sole expense and will pay for labor costs to construct the Project at the prevailing wage rates required by the applicable federal laws and/or applicable laws of the State of California, and the Agency is providing HOME funds to the Developer in its capacity as CHDO for the pre-construction costs for the development of housing units on the Agency Lots for sale to Qualified Homebuyers; and (n) The Agency is responsible for managing the day-to-day operations of its HOME Program including monitoring the performance of all entities receiving HOME funds from the Agency to ensure compliance with the requirements of 24 CFR Part 92, and for taking appropriate action when performance problems arise; and (0) The Developer has fully reviewed the CHDO requirements under the HOME Program and hereby certifies and warrants to the Agency that it has the qualifications and the ability to construct the Project in accordance therewith; and (P) The Developer and the Participant have entered into an agreement in which the Developer and the Participant shall develop the Agency Lots with the New Homes in the manner and pursuant to the other terms, covenants and conditions as more specifically set forth in said agreement as attached hereto as Exhibit "E"; and (q) The Agency has determined that development of the Project upon the Agency Lots pursuant to this Agreement and the additional financial incentives provided by this Agreement is vital and in its best interest of the City and the Agency. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES AND COVENANTS SET FORTH HEREIN, THE AGENCY, THE DEVELOPER AND THE PARTICIPANT HEREBY AGREE AS FOLLOWS: 1. DEFINITIONS. In addition to the meaning ascribed to certain words and phrases as set forth in the Recitals of this Agreement, other words and phrases shall have the meaning described below: Additional DeveloperlParticipant Downpayment Assistance. The term "Additional DeveloperfParticipant Downpayment Assistance" shall mean those additional downpayment assistance loans made by the Developer and the Participant on a case-by-case basis, as necessary, to provide for the acquisition and funding of a New Home for purchase by a Qualified Homebuyer who has executed a promissory note and deed of trust in favor of the Developer and the Participant or their assigns as further provided in Section 5.6(b) hereof. Such deed of trust shall be subordinate to and in a second lien position to any Agency Downpayment Assistance for such New Home purchase. .15 3 Adjusted Family Income. The term "Adjusted Family Income" mean the anticipated total annual income (adjusted for family size) of each individual or family residing or treated as residing in the New Home as calculated in accordance with Treasury Regulation 1.167(k) _ 3(b)(3) under the Code, as adjusted, based upon family size in accordance with the household income adjustment factors adjusted and amended from time to time, pursuant to Section 8 of the United States Housing Act of 1937, as amended. Agency Downpayment Assistance. The term "Agency Downpayment Assistance" shall mean and refer to the purchase money financial assistance, which the Agency may provide to Qualified Homebuyers of New Homes constructed on Agency Lots. The amount of such Agency Downpayment Assistance in favor of a particular Qualified Homebuyer to purchase a New Home shall not exceed Sixty Thousand Dollars ($60,000.00), and shall not exceed Two Hundred Forty Thousand Dollars ($240,000.00), in the aggregate, in connection with the purchase by each Qualified Homebuyer of the four (4) New Homes. Nothing contained herein shall preclude the Developer and/or the Participant from requesting of, the Agency such additional dollar amounts of the Agency Downpayment Assistance on a case-by-case basis which additional amounts of assistance mayor may not be granted by the Agency at its sole discretion. Agency Grant Deed. The term "Agency Grant Deed" shall mean that certain grant deed by which the Agency shall convey and transfer Agency Lots to the Developer and to the Participant as joint tenants in substantially the form attached as Exhibit "C". Agency Lot. The term "Agency Lot" shall mean and refer to any parcel of real property which is both: (i) owned by the Agency as of the date of this Agreement, and (ii) made available for transfer to the Developer and to the Participant under the terms and conditions of this Agreement. Agency Regulatory Agreement. The term "Agency Regulatory Agreement" shall mean and refer to that certain regulatory agreement, declaration of covenants, conditions and restrictions (CC&Rs) affecting the Agency Lots and the Project by and among, the Agency, the Developer, the Participant and the Qualified Homebuyer in the form attached hereto as Exhibit "D" and recorded in the Official Records of the County Recorder's Office for the County of San Bernardino on the closing date of each New Home Escrow (as defmed below). Certificate of Completion. The term "Certificate of Completion" shall mean that form attached hereto as Exhibit "F" and as further described in Section 4.6 hereof. City. The term "City" shall mean and refer to the City of San Bernardino, a charter city, having its offices at 300 North "D" Street, San Bernardino, California 92418. Closing/Closing Date/Close of Escrow. The terms "Closing", "Closing Date" and "Close of Escrow" shall mean and refer to the date on which the conditions for the completion of the performance of the duties of the parties have been satisfied and the Agency Grant Deed conveying the Agency Lots to the Developer and to the Participant is recorded in the Office of the County Recorder of San Bernardino County, California. The Closing shall occur on or before the date provided in the Schedule of Performance attached hereto as Exhibit "B". .15 4 Completed New Home. The term "Completed New Home" shall mean and refer to each new single-family residential unit to be designed, constructed and improved by the Developer and by the Participant on each Agency Lot. Each Completed New Home constructed on an Agency Lot shall be reserved and made available for sale to and occupancy by a Qualified Homebuyer designated by the Developer and by the Participant. Completed New Home Purchase Price. The term "Completed New Home Purchase Price" shall mean and refer to the applicable purchase price payable by the Qualified Homebuyer to the Developer and to the Participant for the purchase of each Completed New Home at the close of the applicable New Home Escrow. The Completed New Home Purchase Price for a New Home constructed on an Agency Lot shall be an amount which does not exceed a sum which is payable by the Qualified Homebuyer at the time of close of the New Home Escrow not to exceed ninety-five percent (95%) of the median purchase price for the County of San Bernardino as set forth at 24 CFR Part 92.254(a)(2)(iii). Completion of the Project. The term "Completion of the Project" shall mean and refer to the date that the Developer and the Participant have caused the last New Home to be sold to a Qualified Homebuyer. Delivery Date. The term "Delivery Date" shall mean and refer to the close of a New Home Escrow for a particular New Home following its completion, or in other words, on the Delivery Date, title and possession of a Completed New Home on an Agency Lot shall be delivered by the Developer and by the Participant to the Qualified Homebuyer at the close of the New Home Escrow. Effective Date. The term "Effective Date" shall mean and refer to the date on which this Agreement has been fully executed by the officers or representatives of the parties following an approving majority vote of the members of the governing board of the Agency authorizing the execution of this Agreement by the Agency and the conditions of Section 3.3(b) have been satisfied. Escrow. The term "Escrow" shall mean and refer to the land transfer and construction financing transaction account by and among the Agency, the Developer, the Participant and the escrow department of the Title Company for the transfer by the Agency of the title to the Agency Lots to the Developer and to the Participant on or before the date as provided in this Agreement. For the purpose of this Agreement, the parties thereto have designated the escrow department of the Title Company to serve as the "Escrow Agent". Hazardous Substances. The term "Hazardous Substances" shall mean and refer to (i) any hazardous or toxic substance or material including petroleum, petroleum-based products, asbestos and asbestos containing materials (ACM) and lead-based paint (LBP), or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government; and/or (ii) any substance or material identified by the United States Government, the State of California or any local governmental authority as hazardous or toxic and which is included on any list of such substances published by any such governmental entity. .15 5 Low-Income Household. The term "Low-Income Household" shall mean and refer to a Household which has the household income characteristics of a "low-income family" as set forth at 42 United States Code Section I 437a(b ). New Home. The term "New Home" shall mean and refer to the affordable single-family residential dwelling unit (including the land and landscape improvements thereon) on an Agency Lot as acquired by the Qualified Homebuyer upon the close of the New Home Escrow. New Home ClosinglNew Home Closing DatelNew Home Close of Escrow. The terms "New Home Closing", "New Home Closing Date" and "New Home Close of Escrow" shall mean and refer to the date on which the conditions for the completion of the performance by the Developer, the Participant and the Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the Successor-In-Interest) have been satisfied and a grant deed, the Agency Regulatory Agreement, the Agency Downpayment Assistance and the Additional Developer/Participant Downpayment Assistance, if applicable, are recorded in the Office of the County Recorder of San Bernardino, California. New Home Escrow. The term "New Home Escrow" shall mean and refer to the real estate conveyance transaction or escrow by and between the Qualified Homebuyer and the seller of the New Home (or later, by and between the Qualified Homebuyer and the Successor-In- Interest). The transfer of the New Home to the Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the Successor-In-Interest) shall be accomplished upon the close of the New Home Escrow. New Home Sales Costs. The term "New Home Sales Costs" shall mean and refer to the actual and reasonable costs incurred by the Developer and by the Participant in the acquisition, development, improvement and sale to a Qualified Homebuyer, as enumerated below in subparagraphs (I) through (10), inclusive, of each Completed New Home on an Agency Lot. Within sixty (60) days following the close of each New Home Escrow for the sale by the Developer and by the Participant of a Completed New Home on an Agency Lot, the Developer and the Participant shall provide the Agency with a suitably detailed written accounting (e.g., in the form of the New Home Sale Costs Certificate) of the New Home Sale Costs for the particular Completed New Home. New Home Sale Costs for each Completed New Home include each of the following: (I) the actual and reasonable escrow and title insurance costs paid by the Developer and/or by the Participant for the purchase of the Agency Lot through the Escrow, if applicable; (2) the cost of preparing the Agency Lot for improvement, including demolition expenses, if any paid by the Developer and/or by the Participant, as applicable, grading, and all off-site costs incurred in connection with the improvement of the Agency Lot, including utility connection charges and adjacent public right-of-way improvements, if any; .15 6 (3) architectural, engineering, legal, accounting, consulting and other professional service fees paid in connection with the planning, execution and financing of the Project as allocated to the Agency Lot; (4) the cost allocated to the Agency Lot of insurance, construction lender financing charges, points and fees, construction loan interest, surety and completion bonds, property taxes, assessments as incurred and paid by the Developer and/or by the Participant between the time of the Closing for the Agency Lot to the Delivery Date for the Agency Lot; (5) the cost of construction materials, equipment and furnishings installed in the Completed New Home and the cost of labor to so construct and install the Completed New Home, and the cost of the Completed New Home on the Agency Lot, all building permits, public school fees, and other regulatory agency charges and the cost of landscaping and fencing as installed and constructed on the Completed New Home; (6) the cost allocated to the Agency Lot of construction supervision costs and private security patrol services incurred by the Developer and/or by the Participant in connection with the New Home; (7) New Home sales, marketing and commissions payable at the Delivery Date of the Completed New Home of six percent (6%) of the gross sales price of the Completed New Home on the Agency Lot; (8) New Home Escrow closing costs paid by the Developer and/or by the Participant at the Delivery Date for the Completed New Home; (9) a Developer and Participant overhead fee of five percent (5%) of the cost items under (2), (3), (5) and (6), above; (I 0) a Developer and Participant profit allowance of ten percent (I 0%) of the gross sales price of the Completed New Home on the Agency Lot; and (I I) the amount of any Additional DeveloperlParticipant Downpayment Assistance funded from the proceeds of the sale of a New Home or from other funds of, or otherwise available to, the Developer and/or the Participant. New Home Sale Costs Certificate. The term "New Home Sale Costs Certificate" shall mean and refer to the written accounting and cost certification prepared by the Developer and by the Participant, as applicable, and submitted to the Agency not later than sixty (60) days following the close of each New Home Escrow for a Completed New Home. Each New Home Sales Costs Certificate shall contain a suitably detailed description of the costs and expenses allocated to the Completed New Home. .15 7 Notice of Agency Concurrence. The term "Notice of Agency Concurrence" shall mean and refer to the acknowledgment executed by the Executive Director of the Agency and delivered to the holder of the New Home Escrow, in which the Agency confirms that the proposed Qualified Homebuyer, appears to satisfy all of the requirements of the Agency Regulatory Agreement for occupancy of the New Home. Project. The term "Project" shall mean and refer to all of the work of investigation, design, construction, improvement, modification, and financing necessary in order for the Developer and the Participant to acquire the Site from the Agency as joint tenants and for the Developer and the Participant to construct four (4) affordable single-family housing units as a project with each New Home consisting of not to exceed approximately 1,300 square foot homes with three (3) bedrooms, two (2) bathrooms and a 400 square feet attached two (2) car garage to be sold to income eligible households. The Project also includes all related landscaping, driveways, utilities and any improvements which may be required by the City within the public rights-of-way adjacent to the Site. This general description of the New Homes is that which the Developer and the Participant presently intend to construct upon the Agency Lots subject to the precise size and other design details being such as may be finally approved by the City through the site development approval process. The functional elements of the Project are more particularly described in the Scope of Development and Site Improvement Plan Concept in Section 4.1 (the "Scope of Development"). Qualified Homebuyer. The term "Qualified Homebuyer" shall mean and refer to low- and very low-income families and persons who meet the income eligibility guidelines of 24 CFR Part 92.216 and Part 92.217 whose income does not exceed 80% of the area median income a.'; determined by the County of San Bernardino and adjusted for family size. Qualified Residence Period. The term "Qualified Residence Period" shall mean and refer to the period of time beginning on the Delivery Date and ending on a date which is forty- five (45) years after the Delivery Date. Redevelopment Plan. The term "Redevelopment Plan" shall mean and refer to the Redevelopment Plan for the Inland Valley Redevelopment Project Area. A copy of the Redevelopment Plan is on file in the Office of the City Clerk of the City. The Redevelopment Plan is incorporated herein by this reference as though fully set forth herein. Schedule of Performance. The term "Schedule of Performance" shall mean and refer to that certain Schedule attached hereto as Exhibit "B". Site. The term "Site" shall mean and refer to that certain unimproved real property located within the City of San Bernardino, County of San Bernardino, State of California, upon which the Project shall be constructed by the Developer and by the Participant consisting of the four (4) Agency Lots, more particularly described in the legal description attached to this Agreement as Exhibit "A". Successor-In-Interest. The term "Successor-In-Interest" shall mean and refer to the person, family or household who may acquire the New Home from the Qualified Homebuyer at .15 8 any time during the Qualified Residence Period by purchase, assignment, transfer or otherwise. The Successor-In-Interest shall be a "first-time homebuyer" and shall have an income level for the twelve (12) months prior to the date on which the Successor-In-Interest acquires the New Home which does not exceed the maximum Adjusted Family Income level for a Low-Income Household. Upon acquisition of the New Home the Successor-In-Interest shall be bound by each of the CC&Rs contained therein as a covenant. Title Company. The term "Title Company" shall mean as of the Effective Date of this Agreement, Orange Coast Title Company, San Bernardino Office, and thereafter any other title company mutually agreeable upon among the Agency, the Developer and the Participant. 2. PURPOSE OF AGREEMENT. The purpose of this Agreement is to effectuate the Redevelopment Plan by improving the Site as well as to assist in providing affordable housing which is reserved for sale and occupancy by Low-Income Households. The redevelopment of the Project on the Site and the fulfillment generally of this Agreement are in the best interests of the Agency, the City and the welfare of its residents and are in accordance with the public purposes and provisions of applicable federal, state and local laws and regulations under which the Project has been undertaken. 3. DISPOSITION OF AGENCY LOTS AND ESCROW. 3.1 Transfer. Subject to the satisfaction of the terms and conditions of this Agreement, the Developer and the Participant shall accept from the Agency and the Agency agrees to transfer to the Developer and to the Participant as joint tenants, title to the Agency Lots on the terms hereinafter set forth. The Agency Lots shall be transferred to the Developer and to the Participant without any monetary consideration in exchange for the affordability covenant to be recorded on each Agency Lot in the manner and at the time required by this Agreement. The Developer and the Participant desire to acquire the Agency Lots for purposes of facilitating the construction of affordable housing units on the Agency Lots by the Developer and by the Participant. The Developer and the Participant shall cause each New Home Escrow to close with the Qualified Homebuyers with the various covenants and agreements as required by this Agreement to be recorded as to the affordable housing units as thus sold by the Developer and by the Participant. 3.2 Opening of Escrow. The Developer, the Participant and the Agency hereby agree to establish the Escrow for the transfer of the title to the Agency Lots to the Developer and to the Participant in the manner as provided herein. The Developer, the Participant and the Agency shall cause the Escrow to be opened within sixty (60) calendar days following the full execution of this Agreement and said Escrow shall Close not later than October 16, 2007, subject to the extensions of time and other requirements contained in Section 7.5 of this Agreement and Exhibit "B". This Agreement shall constitute the joint escrow instructions of the Agency, the Developer and the Participant, and a duplicate original of this Agreement shall be delivered to the Escrow Agent and the Escrow shall .15 9 be deemed to be opened when the Escrow Agent has received a fully executed copy of this Agreement and assigned its escrow account transaction identification to this Agreement. The Escrow Agent is empowered to act under these instructions. The Agency, the Developer and the Participant shall cooperate with the Escrow Agent and promptly prepare, execute, and deliver to the Escrow Agent such additional escrow instructions consistent with the terms herein as shall be reasonably necessary. No provision of any additional escrow instructions shall modifY this Agreement and in the event of any conflict between the provisions of this Agreement and such additional escrow instructions, the provisions of this Agreement shall prevail. 3.3 Conditions to Closing. (a) The obligations of the Developer and the Participant to accept title to the Agency Lots and to Close the Escrow shall be contingent upon the satisfaction, or waiver by the Developer and the Participant, as applicable, of each and all of the following conditions (collectively, the "Acquisition Conditions") by the dates set forth herein: (i) The Agency has deposited into Escrow a certificate (the "FIRPTA Certificate") in such form as may be required by the Internal Revenue Service pursuant to Section 1445 of the Internal Revenue Code and a California Form 590-RE (Residency Certificate), pursuant to Section 18805 of the California Revenue and Taxation Code; (ii) The Agency has prepared and the Developer and the Participant have approved a legal description of the Agency Lots, which shall be attached to the Agency Grant Deed when delivered to the Escrow Agent; (iii) The Developer and the Participant have accepted the condition of the Agency Lots as provided in section 3.8; (iv) The Title Company has confirmed that it shall issue a CLTA Owner's policy of title insurance for the Agency Lots in a form acceptable to the Developer and to the Participant; (v) The Agency has executed and delivered to the Escrow Agent, in recordable form, the Agency Grant Deed and all other documents required under this Agreement in recordable form including the construction loan deed of trust as required by Section 3.3(b)(viii) below. Any waiver of the satisfaction of the foregoing conditions by the Developer and by the Participant must be expressed in writing. In the event that the foregoing conditions have not been satisfied within the time provided in the Schedule of Performance but not in all events by a date not later than thirty (30) calendar days after written request from the Developer and from the Participant, or in the event that the Agency may be in default, the Developer and/or the Participant may terminate this Agreement by delivering a written notice in accordance with Section 3.10, subject to any cure rights provided therein. From time-to-time, during the period when the Escrow is open, the Agency may send written notices to the Developer and to the Participant which reference this Section 3.3(a), and within ten (10) calendar days following the .15 10 receipt of such a notice the Developer and the Participant shall provide the Agency with a suitably detailed written report which describes the action, if any, which the Developer and the Participant believe may be necessary in order for any of the Acquisition Conditions to the Closing to be satisfied. (b) The obligation of the Agency to transferthe Agency Lots to the Developer and to the Participant and to Close the Escrow shall be contingent upon the satisfaction, or waiver by the Agency, of each of the following conditions (collectively, the "Agency Conditions") by the date set forth herein: (i) The Developer and the Participant have provided the Agency with the information set forth in Section 3.7, and development of the Project or otherwise provided the Agency with financial statements or loan commitments which evidence the Developer's and the Participant's capability to construct the Project and the ability of the Developer and of the Participant to accept title to the Agency Lots and for the Developer and for the Participant to develop the Project remain in full force and effect without material modification or change; . (ii) The Developer and the Participant have delivered their written notice of acceptance ofthe condition of the Agency Lots to the Agency as provided in Section 3.8; (iii) The Developer and tbe Participant have not made or attempted to make a Transfer in violation of Section 4.3 and no default by the Developer and/or by the Participant exist under this Agreement; (iv) The Developer and the Participant have deposited into Escrow and executed, in recordable form, the certificate of acceptance of the Agency Grant Deed and the other documents required under this Agreement, and delivered to the Escrow Agent any other funds required to pay costs of the Developer and of the Participant to be paid at the time of Closing; (v) The Developer and the Participant have accepted the condition of the Agency Lots and shall have timely performed each and every other obligation of the Developer and of the Participant hereunder; (vi) The Developer and the Participant have submitted the final building plans for the Project for approval by the Agency as provided in Section 4.1 below and the Agency has approved such [mal building plans; (vii) The Developer and the Participant have obtained all other necessary governmental approvals for the issuance of all permits and other entitlements for the c.onstruction of the Project, subject only to the submission of [mal plans and the payment of the applicable permit fees and public capital improvement charges, and such building permits as issued by the City for the construction of the four (4) New Homes shall be such as to allow for the commencement of construction immediately after the Close of Escrow; .15 II (viii) The Developer and the Participant shall have obtained a construction loan from a recognized lender reasonably acceptable to the Executive Director which construction loan deed of trust must be in a condition to record upon the Agency Lots immediately upon the transfer of title thereto from the Agency to the Developer and to the Participant upon the Close of Escrow. Any waiver of the satisfaction of the foregoing conditions by the Agency must be expressed in writing. In the event that the foregoing conditions have not been satisfied within the time provided in the Schedule of Performance, or in the event that the Developer and/or the Participant may be in default, the Agency may terminate this Agreement by delivering a written notice in accordance with Section 3.10, subject to any cure rights provided therein. From time- to-time, during the period when the Escrow is open, the Developer and/or the Participant may send written notices to the Agency which reference this Section 3.3 (b), and within ten (10) calendar days following the receipt of such notice the Agency shall provide the Developer and the Participant, as applicable, with a suitably detailed written report which describes the action, if any, which the Agency believes is necessary in order for any of the foregoing the Agency Conditions to the Closing to be satisfied. 3.4 Tax Reporting and Miscellaneous Matters. Prior to the Closing, the Developer, the Participant and the Agency shall execute and deliver a certificate (Taxpayer ill Certificate) in such form as may be required by the IRS pursuant to Section 6045 of the Internal Revenue Code, or the regulations issued pursuant thereto, certifying as to the description of the Agency Lots, date of Closing, gross price, if any, and taxpayer identification number for the Developer, the Participant and the Agency. Prior to the Closing, the Developer, the Participant and the Agency shall cause to be delivered to the Escrow Agent such other items, instruments and documents, and the parties shall take such further actions, as may be necessary or desirable in order to complete the Close of Escrow. 3.5 Escrow Procedures and Conveyance of the Agency Lots. (a) The Closing shall occur upon satisfaction of the Acquisition Conditions and the Agency Conditions as applicable; provided, however, in the event that the Closing has not occurred by a date not later than on or before October 16, 2007, subject to the provisions of Section 7.5 and Exhibit "B" Schedule of Performance, for any other reason, then after such date, any party who is not then in default may give its written notice of termination of the Escrow which references this Section 3.5(a), whereupon, this Agreement shall terminate and the Escrow shall be canceled. The Escrow Agent shall return any documents or funds then in its possession to the party who delivered such documents or funds, and the Developer and the Participant collectively shall pay one-half (1/2) of the Escrow Agent's reasonable cancellation charges, if any, and the Agency shall pay the other one-half (1/2) of such charges. Upon the payment of such Escrow cancellation charges the parties shall be mutually released from any further liability hereunder. The fmal date for the Closing may be extended by the mutual written agreement of the parties. .15 12 (b) Within ten (10) calendar days prior to the estimated time of the Closing, the Escrow Agent shall advise the Agency, the Developer and the Participant, in writing, of the approximate amount of the fees, charges, and other costs necessary to Close the Escrow, and of any documents which have not been provided by said party and which must be deposited in Escrow to permit Closing. (c) On or before the third business day preceding the Closing Date, the Agency shall execute, acknowledge and deposit into Escrow (i) the Agency Grant Deed, and (ii) the FIRPT A Certificate. (d) On or before the Closing, the Developer and the Participant shall execute and acknowledge, as may be required, and deposit into Escrow (i) the acceptance of the Agency Grant Deed, and (ii) other security documents of a lender approved by the Agency pursuant to Section 3.7, ifany. (e) Upon the completion by the Agency, the Developer and the Participant of the deliveries and actions specified in these escrow instructions the Escrow Agent shall be authorized to pay any documentary transfer taxes and recording fees, if required by law, and thereafter cause to be recorded in the appropriate records of San Bernardino County, California, the Agency Grant Deed and the other instruments delivered or exchanged by the parties through this Escrow. Concurrent with recordation, the Escrow Agent shall deliver the Title Policy to the Developer and to the Participant. Following recordation, the Escrow Agent shall deliver copies of said instruments to the Developer, the Participant and the Agency and provide the parties with copies of the final Escrow Closing statement. In addition, after deducting any sums specified in this Agreement, the Escrow Agent shall disburse funds to the party entitled thereto. 3.6 Title Matters. (a) At Closing, the Agency shall convey fee title to the Agency Lots to the Developer and to the Participant subject only to: (i) the use restriction as set forth in the Agency Grant Deed; (ii) the other CC&Rs set forth in the Agency Grant Deed; (iii) nondelinquent real property taxes and assessments; (iv) utility easements; (v) public street easements; (vi) applicable zoning and development regulation of the City as it affects Agency Lots, and (vii) CC&Rs, easements, and other encumbrances and title exceptions approved by the Developer and by the ParticiPant (collectively, the "Permitted Exceptions"). (b) Within fifteen (15) calendar days after the Escrow is deemed opened, the Agency shall deliver to the Developer and to the Participant a preliminary title report for the Agency Lots issued by the Title Company, dated as of the opening of Escrow, together with copies of all title exception/matters referenced therein. Within thirty (30) calendar days following its receipt of the preliminary title report, the Developer and the Participant shall deliver to the Agency written notice specifying in detail any exception (other than those exceptions specifically listed in Section 3.6(a)) disapproved and the reason therefore. Within fifteen (15) calendar days following its receipt of such written notice from the Developer and from the Participant, the Agency shall deliver written notice to the Developer and to the Participant as to whether the Agency will or will not cause the disapproved exceptions to be removed or to be endorsed with .15 I3 endorsements providing the Developer and the Participant with reasonable assurance with respect to the disapproved exceptions. If the Agency elects not to cure the disapproved exceptions, the Developer and the Participant, collectively and individually, may terminate this Agreement, without any liability of the Agency to the Developer or to the Participant by giving notice which references this Section 3.6(b) and the parties shall be mutually released from any further duty or responsibility. If the Agency so elects to cure the disapproved exceptions, the Agency shall do so on or before the Closing. (c) Upon the Closing, the Title Company shall furnish the Developer and the Participant with a CLTA owner's policy of title insurance insuring the Developer's and the Participant's fee interests in the Agency Lots subject only to the Permitted Exceptions (the "Title Policy"). The Agency shall pay the premium charged by Title Company for the issuance of the Title Policy. The Developer and the Participant shall be responsible for obtaining and paying for the cost of any title policy insuring the interest of any interested person in the Agency Lots and/or the Project. 3.7 The Developer and the Participant Financing; Agency Grant to Developer and to Participant and Developer and/or Participant Covenants. (a) Within thirty (30) calendar days after the date of this Agreement, the Developer and the Participant shall submit to the Executive Director of the Agency, for approval, such evidence as may be reasonably satisfactory to the Executive Director of the Agency demonstrating that the Developer and the Participant have the financial capability necessary for the development of the Project pursuant to this Agreement. Such evidence of financial capability shall include all of the following: (i) Reliable cost estimates for the Developer's and the Participant's total cost of developing the Project (including both hard and soft costs); (ii) a financial statement and/or other documentation reasonably satisfactory to the Executive Director of the Agency sufficient to demonstrate that the Developer and the Participant have adequate funds available and committed to cover the development costs of the Project including any costs overruns that exceed the amount of the construction loan financing to be provided to the Developer and to the Participant and the other HOME funds to be provided to the Developer pursuant to this Agreement; (iii) a copy of any other contracts with the general contractors of the Developer and of the Participant, if any, for all of the improvement of the Project certified by the Developer and by the Participant to be a true and correct copy thereof. The Executive Director of the Agency shall also have the right to review and approve any revisions that are made to the proposed contracts with the general contractors after its/their approval by the Executive Director of the Agency. (b) The Developer and the Participant covenant and agree to take all action and shall furnish all information, give all consents and pay all sums required and comply with all conditions thereof, and shall promptly execute, acknowledge and deliver all applications, credit applications and data, financial statements and documents in connection therewith, for the costs .15 14 of the Project which include, but are not limited to, architectural, engineering, legal, organizational, insurance, the other fees and overhead amounts and the cost of construction and marketing of the Project. (c) The Agency agrees to make available to the Developer an amount of HOME funds equal to $190,000.00 (the "HOME Funds Grant") which shall be used by the Developer for the payment of certain pre-development costs and expenses of the Project related to, and including, but not limited to, the costs of obtaining firm construction loan commitments, preparation and review of the architectural and engineering plans and specifications, zoning approvals, engineering studies, project management, payment of City and other governmental agency fees, including school fees, and the costs of permits, application costs and fees and City inspection fees, legal and accounting costs (collectively referred to herein as the "Qualified HOME Fund Expenditures"). Such HOME Funds Grant shall be payable to the Developer on an as-needed basis upon presentation to the Agency of an invoice from the Developer or from a third party consultant or contractor for a qualified expenditure item as permitted herein. In the event that the Qualified HOME Fund Expenditures do not equal the amount of the HOME Funds Grant that has been committed by the Agency because of cost savings in the dollar amounts of the Qualified HOME Fund Expenditures, the Agency shall not provide further advances to the Developer. (d) In consideration of the receipt of the HOME Funds Grant by the Developer in the manner as provided in (c) above, the Developer and the Participant agree to cause to be built in other locations within the City, not less than two (2) additional affordable housing units available to Low-Income Households (singularly, "Additional New Home" and collectively, "Additional New Homes") within twenty-four (24) months following the date of completion of the affordable housing units intended to be constructed on the Agency Lots. On the closing date of each escrow in connection with the purchase and sale of each Additional New Home, the Developer and the Participant shall cause a mutually executed and duly notarized Agency Regulatory Agreement to be recorded in the Official Records of the County Recorder's Office for the County of San Bernardino. Within ten (10) calendar days after such closing date for each Additional New Home, the Developer and the Participant shall provide written notice to the Agency describing the Additional New Home and submitting to the Agency (i) a copy of each Agency Regulatory Agreement utilized for each such Additional New Home, (ii) the income limits for which such purchaser of an Additional New Home has been qualified for purchase thereof, and (iii) the sales price of the Additional New Home. 3.8 Condition of the Agency Lots. (a) The Developer and the Participant shall have the right to approve the physical condition of the Agency Lots, including its soil and enviromnental condition, based upon the inspections to be conducted by the Developer and by the Participant of the Agency Lots and the records of the Agency. The Developer and the Participant shall, at their sole cost and expense, retain the consultant or consultants of its choice to assist the Developer and the Participant in their review of any and all aspects of the soils, environmental, geotechnical and other physical conditions of the Agency Lots, including all information, reports and records of the Agency pertaining to the physical condition of the Agency Lots. The Developer, the Participant and their .IS 15 consultants shall also have the right to make any inspection of the Agency Lots and to conduct any intrusive soil sampling tests it deems appropriate with respect to either its geotechnical soils investigations or soils investigations relating to the potential presence of any Hazardous Substance on the Agency Lots. The Developer and the Participant shall notify the Agency at least seventy-two (72) hours in advance of any entry onto the Agency Lots pursuant to Section 3.8(c) and in the event the Developer, the Participant or their consultant desires to conduct tests involving the drilling, trenching or boring of the soils located on the Agency Lots, the consultant of the Developer and of the Participant shall work with and cooperate with the Agency to assure that all such tests are conducted in a manner consistent with the highest industry standards and in a manner that will not damage or injure the Agency Lots. Within the time provided in the Schedule of Performance, the Developer and the Participant shall conduct and complete their own independent inspection and investigation of the Agency Lots, and their investigation of all records and reports concerning the physical condition of the Agency Lots, determine if the soils, environmental, geotechnical and other physical conditions of the Agency Lots are suitable for the development and construction of the Project on the Agency Lots. The Developer and the Participant shall not rely on any statement or representation by the Agency or the City relating to the conditions of the Agency Lots. Without limiting the foregoing, the Agency makes no representation or warranty as to whether the Agency Lots presently complies with environmental laws or whether the Agency Lots contains any Hazardous Substance. By not later than the date indicated in the Schedule of Performance, the Developer and the Participant shall deliver a written notice to the Agency which references this Section 3.8 and includes a statement that either (i) the Developer and the Participant accept the condition of the Agency Lots in their "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS" conditions; or (ii) the Developer and the Participant disapprove the condition of the Agency Lots for the specific reason or reasons or grounds set forth in such notice. The Agency shall have no obligation or liability to the Developer and/or to the Participant to correct, cure, remedy or abate any soils, environmental, geotechnical or other physical condition of the Agency Lots, including, without limitation, the remediation of any Hazardous Substance thereon, which may provide the Developer and the Participant with a basis to disapprove the condition of the Agency Lots. If the Developer and/or the Participant notify the Agency in writing of the presence of any Hazardous Materials upon the Agency Lots, then this Agreement shall be subject to termination by any party without liability to the other parties upon the giving of notice of termination whichJeferences this Section 3.8, whereupon the parties shall be mutually released from all further responsibilities or liabilities. (b) Upon acquisition of title to the Agency Lots by the Developer and by the Participant, the Developer and the Participant shall take possession of the Agency Lots in their "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS" condition and the Developer and the Participant shall be responsible for any defects in the Agency Lots, whether patent or latent, including, without limitation, the physical, environmental and geotechnical condition of the Agency Lots, and the existence of any contamination, Hazardous Substances, vaults, debris, pipelines, abandoned wells or other structures located on, under or about the Agency Lots. The Agency makes no representation or warranty concerning the physical, environmental, geotechnical or other condition of the Agency Lots, the suitability of the Agency Lots for the Project, or the present use of the Agency Lots, and specifically disclaims all representations or warranties of any nature concerning the Agency Lots made by it, the City and their employees, agents and representatives. The foregoing disclaimer of the Agency includes, without limitation, .15 16 topography, climate, air, water rights, utilities, present and future zoning, soil, subsoil, existence of Hazardous Substances or similar substances, the purpose for which the Agency Lots is suited, or drainage. The Agency shall not be responsible for grading the Agency Lots and makes neither representation nor warranty concerning the compaction of soil upon the Agency Lots, nor of the suitability of the soil for construction. The Developer and the Participant have specifically reviewed and accepts the provisions of this Section 3.8(b), and the provisions of this Section 3.8(b) shall survive the Close of Escrow. Initials of the Developer Initials of the Participant (c) Prior to the date specified in the Schedule of Performance for the approval of the condition of the Agency Lots under Section 3.8 thereof, the Developer and the Participant, their employees, agents or contractors have the right, at the Developer's and/or the Participant's sole cost and expense, to enter onto the Agency Lots to conduct soils, engineering or other tests and studies, to perform preliminary work or for any other purposes to carry out the terms of this Agreement; provided, however, that no work of improvement of the Project shall commence until the Escrow has Closed and the Developer and the Participant have acquired the fee title interest in the Agency Lots from the Agency. The Developer and the Participant shall indemnify, defend and hold the Agency harmless from and against any claims, injuries or damages arising out of or involving any such entry or activity as provided in Sections 6.1 through 6.8. Any such activity shall be undertaken by the Developer and by the Participant only after securing any necessary permits from the appropriate governmental agencies and delivering to the Agency certificates of insurance evidencing the coverages required in Section 4. I (y). 3.9 Cost of Escrow. (a) At Closing, the Escrow Agent is authorized to allocate certain Escrow costs as follows: the Agency shall pay (i) the documentary transfer tax; (ii) recording fees for the Agency Grant Deed; (iii) the premium for the Title Policy, and (iv) all of the customary service charges and expenses of the Escrow Agent. The Developer and the Participant shall pay (i) the recording charges for all financing documents and other matters and (ii) the price for any endorsements or binders to the Title Policy as the Developer and the Participant may in their discretion request. Each such party shall pay its own attorneys' fees. Any other usual and customary fees or costs which are not specifically allocated herein shall be paid by the Agency provided, however, that the parties who incur special messenger or overnight delivery charges shall be solely responsible for such expenses of the Escrow Agent. (b) Ad valorem taxes and assessments on tlie Agency Lots, if any, for the current year shall be prorated by the Escrow Agent as of the date of Closing, and the Agency shall be responsible for any such taxes or assessments levied, assessed or imposed prior to Closing, and the Developer and the Participant shall be responsible for those after Closing. If the actual taxes are not known at the date of Closing, the proration shall be based upon the most current tax figures. When the actual taxes for the year of Closing become known, the Developer, the .IS 17 Participant and the Agency shall, within thirty (30) calendar days after written notice, prorate the taxes in cash between themselves outside ofthe Escrow. (c) In the event that a party who is not then in default may terminate this Agreement before the Closing, the Developer and the Participant collectively shall pay one-half and the Agency shall pay the other one-half (y,) of the Escrow Agent's fees, charges, and expenses, including Title Policy cancellation charges, if any. In the event that a party who is not in default may terminate this Agreement as provided in Section 3.10, then the party who is in default shall be responsible for paying for all of the Escrow Agent's fees, charges, and expenses, including Title Policy cancellation charges, if any. 3.10 Cancellation of Escrow Prior to Closing upon Failure of Conditious without Fault by Any Party, Default and Termination. The Escrow may be canceled and this Agreement terminated prior to the Closing upon the written notice of any party who then shall have fully performed its obligations hereunder if: (i) either the Acquisition Conditions or the Agency Conditions have not occurred or have not been approved, disapproved, or waived as the case may be, by the approving party by the date established either in the Schedule of Performance or herein for the occurrence of such condition; or (ii) Escrow is not in a position to close by no later than on or before October 16, 2007, for any reason, subject to the provisions of Section 7.5 and Exhibit "B" Schedule of Performance. In the event of the foregoing, the terminating party may demand, in writing, return of its money, papers or documents from the Escrow Agent and shall deliver a copy of such notice to the non- terminating party. Fifteen (\5) calendar days after such notice has been delivered to the Escrow Agent and the other party, this Agreement shall terminate and the Escrow Agent shall cancel the Escrow without further instruction, whereupon the parties shall be mutually released from any further obligation; provided, however, that the mutual representations of the parties under Section 3.12 and the indemnity provisions of Section 3.8(c), and Section 6.7 shall survive any such termination of this Agreement. 3.11 Responsibilities of Escrow Agent. (a) All funds received in Escrow shall be deposited by the Escrow Agent in an escrow account with any state or national bank doing business in the State of California. (b) All communications from the Escrow Agent shall be directed to the addresses and in the manner provided in Section 7.2 of this Agreement for notices, demands, and communications among the Agency, the Developer and the Participant. (c) The Escrow Agent is not to be concerned with the sufficiency, validity, correctness of form, or content of any document prepared outside of Escrow and delivered to Escrow. The sole duty of the Escrow Agent is to accept such documents and follow the written instructions from the Agency, the Developer and the Participant for their use. .15 18 (d) Upon the satisfaction of the Acquisition Conditions and the Agency Conditions, the Escrow Agent shall comply with the final written Escrow Closing instructions addressed to the Escrow Agent by the Developer, the Participant and by the Agency. (e) The. Escrow Agent shall in no case or event be liable for the failure of any of the conditions to Closing, or for forgeries or false impersonation, unless such liability or damage is the result of negligence or willful misconduct by the Escrow Agent. 3.12 No Real Estate or Broker Commission Payable. The parties mutually represent and warrant that no real estate broker commission or [mder's fee is payable to a third party in connection with the transfer of the Agency Lots by the Agency to the Developer and to the Participant. However, nothing contained herein shall preclude or limit the ability of the Developer and/or the Participant to pay normal and customary real estate broker fees and commissions to third party licensed real estate brokers upon the sale of the completed single-family homes on the Agency Lots to Qualified Homebuyers. 4. DEVELOPMENT OF THE PROJECT BY THE DEVELOPER AND BY THE PARTICIPANT. 4.1 Scope of Development. (a) Except for the work of technical investigation and testing of soils as authorized under Section 3.8, no other work of improvement of the Project shall be undertaken on the Agency Lots prior to the Closing between the Developer and the Participant as the purchaser and the Agency as the seller. It is the intent of the parties that promptly following the Close of the Escrow the Developer and the Participant shall commence the work of improvement of the Project on the Site. The Project consists of the elements set forth herein: I. General Proiect Description Each unimproved lot in the Site contains approximately 6,750 square feet each. The Project shall consist of the construction of not less than four (4) homes each of not less than approximately 1,300 square feet with three (3) bedrooms and two (2) bathrooms, and a 400 square foot attached two (2) car garage designated as affordable single-family housing units for low-income households as defined by federal law and regulations. II. Design Obiectives The following is a statement of design objectives for development ofthe Site: a. The creation and achievement of an attractive and pleasant environment reflecting a high level of concern for architectural and urban design principles both in terms of the development itself and its compatibility and suitability with the surrounding community and the provision of a pleasing, safe and well-maintained living environment, and vehicle parking in an urban environment. .15 19 III. Development Standards (a) The Project shall be designed and constructed in accordance with the approved terms and conditions of approval of the land use entitlements approved by the City of San Bernardino for this Project, if applicable. (b) The City's zoning ordinance and the City's building requirements will be applicable to the use of the Site and development of the Project. The Developer and the Participant acknowledge that the plans for development of the Site as set forth in the Scope of Development shall be subject to the City's zoning ordinance and building requirements. No action by the Agency or the City with reference to this Agreement or related documents shall be deemed to constitute a waiver of any City requirements which are applicable to the Site or to the Developer and/or to the Participant or to any Successor-In-Interest of the Developer and/or of the Participant except by modification or variance duly approved by the City in accordance with applicable law in its sole and absolute discretion. (c) The Scope of Development set forth above is hereby approved by the Agency upon its execution of this Agreement. The Project shall be developed and completed in conformance with the Scope of Development and any and all other plans, specifications, and similar development documents required by this Agreement, except for such changes as may be mutually agreed upon in writing by and between the Developer and the Participant and the Agency. The Executive Director of the Agency is authorized to approve the preliminary and the final construction plans for the Project, together with the preliminary and the final landscaping plans provided that the Executive Director of the Agency finds at the time of such approval that such plans are reasonably consistent with the Scope of Development. (d) The approval of the Scope of Development by the Agency shall not be binding upon the Mayor and Common Councilor the Planning Commission of the City with respect to any approvals of the Project required by such other bodies under applicable law. If any revision of the Scope of Development is required by another government official, the Agency, department or bureau having jurisdiction over the development of the Site and the Project as a result of development project permits, reviews and approvals under applicable law, the Developer and the Participant and the Agency shall cooperate in efforts to either modify the Scope of Development to accommodate such regulatory requirements or obtain waivers or recommendation of such revisions by the regulatory agencies. The Agency shall not unreasonably withhold approval of such revisions to the Scope of Development as may be required by such regulatory approval powers. (e) Notwithstanding any provision to the contrary in this Agreement, the Developer and the Participant agree to accept and comply fully with any and all conditions of approval applicable to all permits and other governmental actions affecting the development of the Site and the Project. No development of the Site and the Project shall occur except in conformity with all governmental approvals as may be granted with respect to such development. (f) The Developer and the Participant shall, at their sole cost and expense, cause landscaping plans in connection with development of the Project to be prepared and submitted to the City by a licensed landscape architect within the times provided in the Schedule of .15 20 Performance. The Developer and the Participant shall prepare and submit to the City for its approval, preliminary and landscaping plans for the Project which are consistent with City Code requirements. These plans shaH be prepared, submitted, and approved within the times respectively established therefore in the Schedule of Performance as shown on Exhibit "B" and shall be consistent with the Scope of Development. (g) The Developer and the Participant shall, at their sole cost and expense, prepare and submit development plans, construction drawings and related documents within the times provided in the Schedule of Performance for the development of the Project. Such development plans, construction drawings and related documents shall be prepared and submitted in sufficient detail necessary to obtain all necessary building permits from the City for construction of the Project. The Agency shall cooperate with and shaH assist the Developer and the Participant in order for the Developer and the Participant to obtain the approval of any and all development plans, construction drawings and related documents submitted by the Developer and by the Participant to the City consistent with this Agreement within sixty (60) calendar days following the City's receipt of said plans and as further specified in Section 7.5. Any failure by the City to approve any such plans or to issue necessary permits for the development of the Site within said sixty (60) calendar day period shall constitute a City caused delay hereunder, and the Schedule of Performance shaH be extended by that period of time beyond said sixty (60) calendar day period in which the City approves said plans; provided, however, that in the event that the City disapproves of any such plans, the Developer and the Participant shall within sixty (60) calendar days after receipt of such disapproval revise and resubmit such plans in accordance with the City's requirements and in such form and substance so as to obtain the City's approval thereof all as further specified in Section 7.5 for City caused delays. If the City fails to approve or disapprove the plans within sixty (60) calendar days following submission, the plans are deemed approved for purposes of this Agreement only and not for compliance with City requirements for which the Developer and the Participant are otherwise required to comply. (h) During the preparation of all drawings and plans in connection with the development of the Project, the Developer and the Participant shall provide to the Agency regular progress reports to advise the Agency of the status of the preparation by the Developer and by the Participant, and the submission to and review by the City of construction plans and related documents. The Developer and the Participant shall communicate and consult with the Agency as frequently as is necessary to ensure that any such plans and related documents submitted by the Developer and by the Participant to the City are being processed in a timely fashion. (i) The Agency shall have the right of reasonable architectural review and approval of building exteriors and design ofthe structures to be constructed on the Site. The Agency shall also have the right to review all plans, drawings and related documents pertinent to the development of the Project in order to ensure that they are consistent with this Agreement and with the Scope of Development. (j) The Developer and the Participant must carry out each activity in compliance with all Federal laws and regulations described in 24 CFR Part 92 and outlined hereinafter, except that the Developer and the Participant do not assume the Agency's responsibilities for environmental .15 21 review in 24 CFR Part 92.352 or the intergovernmental review process in 24 CFR Part 92.359. These Federal laws and regulations must be complied with as follows: (I) Equal Opportunitv. No person shall be excluded from participation in, be denied the benefits of or be subjected to discrimination under any program or activity funded in whole or in part with HOME funds. In addition, HOME funds must be made available in accordance with all laws and regulations listed in 24 CFR Part 92.350(a). (2) Fair Housing. In accordance with the certification made with its housing strategy, each participating jurisdiction receiving HOME Program funds, must affirmatively further fair housing. Actions described in Section 570.904(c) of Title II of the Cranston-Gonzalez National Affordable Housing Act will satisfy this requirement. (3) Affirmative Marketing. The Developer and the Participant must adopt affirmative marketing procedures and requirements for the Units. These must include: a. Methods for informing the public; b. Requirements and practices that the Developer and the Participant must adhere to in order to carry out the City of San Bernardino's affirmative marketing procedures and requirements; c. Procedures used by the Developer and by the Participant to inform and solicit applications from persons in the housing market area who are not likely to apply without special outreach; d. Records that will be kept describing actions taken by the Developer and by the Participant to affirmatively market units and records to assess the results of these actions; and e. A description of how the Developer and the Participant will assess the success of affirmative marketing actions and what corrective actions will be taken where affmnative marketing requirements are not met. (k) The Developer and the Participant shall commence the construction of the Project immediately on the business day next succeeding the date of the transfer of title of the Agency Lots from the Agency to the Developer and to the Participant after the Close of Escrow and the Developer and the Participant shall diligently pursue such construction through the completion thereof with no abandonment or cessation is construction activities. .15 22 (I) The Developer and the Participant must take all reasonable steps to ensure that all applicable disability accessibility requirements are met in the design and construction of the Project. To this end, the Project shall be designed and constructed in compliance with all disability accessibility requirements, including, but not limited to, Title II of the Americans with Disabilities Act, any regulations promulgated or disseminated by HUD relating to the accessibility of residential facilities for persons with disabilities, The Uniform Federal Accessibility Standards ("UFAS") and/or the Americans with Disabilities Act Accessibility Guidelines for Buildings and Facilities ("ADAAG"), Title 24 of the California Building Code ("CBC"), Section 504 of the Rehabilitation Act, 29 U.S.C. ~ 794, 28 CFR 35.151, et seq. and 48 U.S.C 12101, et seq, to the extent applicable the Project. (m) The Developer and the Participant shall comply with all requirements set forth regarding conflict of interest provisions as they apply in 24 CFR Part 92.356. (n) As required in 24 CFR Part 92.357, the Developer and the Participant will comply with all debarment and suspension certifications. (0) Under the Flood Disaster Protection Act of 1973, HOME funds may not be used with respect to the acquisition or rehabilitation of a project located in an area identified by the Federal Emergency Management Agency (FEMA) as having special flood hazards, unless: (A) The community in which the area is situated is participating in the National Flood Insurance Program, or less than a year has passed since FEMA notification regarding such hazards. (8) Flood insurance is obtained as a condition of approval of the commitment. (C) The Agency is responsible for assuring that flood insurance under the National Flood Insurance Program is obtained and maintained. (P) Subject to the terms and conditions of this Agreement and as further set forth in Section 3.7(c) hereof, the Agency shall make available to the Developer from CHDO/HOME funds for the actual expenses as provided below, in a total amount not to exceed $190,000.00 which is considered here to be the HOME Funds Grant. The proceeds of the HOME Funds Grant shall be used and applied by the Developer to carry out the HOME Project as set forth in Section 3.7(c) of this Agreement. The Developer and Participant's expenses qualifYing for payment or reimbursement pursuant to the HOME Funds Grant shall be evidenced by supporting documentation, setting forth the actual expenses of the Developer in relation to the authorized purposes set forth in this Section, and any costs in excess of the HOME Funds Grant amount of $163,200.00) shall be borne by the Developer. The Agency shall have the right, upon reasonable notice, to inspect and audit all books and records of the Developer pertaining to the use of the HOME Funds Grant. The HOME Funds Grant shall be disbursed by the Agency to the Developer as set forth in this Agreement. The Agency will submit the "Designation of Community Housing Development .15 23 -l Organization", Form HUD-40098, to reserve funds for use by the Developer promptly following the approval of this Agreement by the governing board of the Agency. (q) The Executive Director of the Agency shall approve any modified or revised plans, drawings and related documents to which reference is made in this Agreement within the times established in the Schedule of Performance as long as such plans, drawings and related documents are generally consistent with the Scope of Development and any other plans which have been approved by the Agency. Upon any disapproval of plans, drawings or related documents, the Executive Director of the Agency shall state, in writing, the reasons for such disapproval. The Developer and the Participant, as applicable, upon receipt of notice of any disapproval, shall promptly revise such disapproved portions of the plans, drawings or related documents in a manner that addresses the reasons for disapproval and reasonably meets the requirements of the Agency in order to obtain the Agency's approval thereof. The Developer and the Participant shall resubmit such revised plans, drawings and related documents to the Agency as soon as possible after its receipt of the notice of disapproval and, in any event, not later than thirty (30) calendar days thereafter. The Executive Director of the Agency shall approve or disapprove such revised plans, drawings and related documents in the same manner and within the same times as provided in this Section for approval or disapprovaL of plans, # drawings and related documents initially submitted to the Agency. (r) If the Developer and the Participant desire to make any change in the construction drawings, plans and specifications and related documents after their approval by the Agency and/or the City, the Developer and the Participant shall submit the proposed change in writing to the Executive Director of the Agency and/or the City for their independent approval. The Executive Director of the Agency shall notify the Developer and the Participant of approval or disapproval thereof in writing within thirty (30) calendar days after submission to the Agency. This thirty (30) calendar day period may be extended by mutual consent of the Developer, the Participant and the Executive Director of the Agency. Any such change shall, in any event, be deemed to be approved by the Agency unless rejected, in whole or in part, by written notice thereof submitted by the Executive Director of the Agency to the Developer and to the Participant, setting forth in detail the reasons therefore, and such rejection shall be made within said thirty (30) calendar day period unless extended as permitted herein. The Agency shall use its best efforts to cause the City to review and approve or disapprove any such change as provided in Section 4.1(s) hereof. (s) The Developer and the Participant, upon receipt of a notice of disapproval by the Agency and/or the City, may revise such portions of the proposed change in construction drawings, plans and specifications and related documents as are rejected and shall thereafter resubmit such revisions to the Agency and/or the City for their independent approval in the manner provided in Section 4.1 (g) hereof. (t) The Developer and the Participant shall have the right during the course of construction of the Project to make changes in construction of structures and "minor field changes" without seeking the approval of the Agency; provided, however, that such changes do not affect the type of use to be conducted within all or any portion of a structure. Said "minor field changes" shall be defined as those changes from the approved construction drawings, plans, and specifications which have no substantial effect on the improvements and are made in order .15 24 to expedite the work of construction in response to field conditions. Nothing contained in this Section shall be deemed to constitute a waiver of or change in the City's Building Code requirements governing such "minor field changes" or in any and all approvals by the City otherwise required for such "minor field changes". (u) The cost of designing, constructing, installing and equipping the Project, including the installation of all off-site public improvements, shall be borne by the Developer and by the Participant. (v) As a non-profit organization and a recipient of HOME funds, the Developer certifies and warrants that it meets the requirements of OMB Circular No. A-122. The Agency shall monitor the activities of the Developer in order to ensure the continued compliance with these provisions and any other provisions applicable under the HOME Program. (w) The Developer and the Participant shall pay for any and all costs, including, but not limited to, the costs of design, construction, relocation and securing of permits for utility improvements and connections, which may be required in developing the Project. The Developer and the Participant shall obtain any and all necessary approvals for utility services prior to the commencement of applicable portions of said construction, and the Developer and the Participant shall take reasonable precautions to ensure the safety and stability of surrounding properties during said construction. (x) The Developer and the Participant shall commence the work of improvements of the Project on the Site within ninety (90) calendar days following the Close of Escrow for the Site, and thereafter shall diligently prosecute such construction to completion. All construction and development obligations and responsibilities of the Developer and of the Participant as related to the Project shall be initiated and completed within the times specified in the Schedule of Performance, or within such reasonable extensions of such times as may be granted by the Agency or as otherwise provided for in this Agreement. The Developer and the Participant shall substantially complete the improvement of the Project by the date set forth in the Schedule of Performance. During the course of the construction of the Project, the Schedule of Performance may be revised from time-to-time as mutually agreed upon. (y) Prior to the entry by the Developer and by the Participant to conduct limited testing on the Agency Lots pursuant to Section 3.8, and following the Closing before the commencement of any construction by the Developer and by the Participant of the Project, the Developer and the Participant shall procure and maintain, at their sole cost and expense, in a form and content satisfactory to the Agency, during the entire term of such entry or construction, the following policies of insurance: (i) a policy of comprehensive general liability insurance written on a per occurrence basis in an amount not less than either (i) a combined single limit of One Million Dollars ($1,000,000.00) or (ii) bodily injury limits of Five Hundred Thousand Dollars ($500,000.00) per person, One Million Dollars ($1,000,000.00) per occurrence, One Million Dollars ($1,000,000.00) products and completed operations and property .15 25 damage limits of Five Hundred Thousand Dollars ($500,000.00) per occurrence and Five Hundred Thousand Dollars ($500,000.00) in the aggregate. (ii) a policy of workers' compensation insurance in such amount as will fully comply with the laws of the State of California and which shall indemnify, insure, and provide legal defense for the Developer, the Participant ,the Agency and the City against any loss, claim or damage arising from any injuries or occupational diseases occurring to any worker employed by or any persons retained by the Developer and/or by the Participant in the course of carrying out the work or services contemplated in this Agreement. (iii) a policy of comprehensive automobile liability insurance written on a per occurrence basis in an amount not less than either (i) bodily injury liability limits of Two Hundred Fifty Thousand Dollars ($250,000.00) per person and Five Hundred Thousand Dollars ($500,000.00) per occurrence and property damage liability limits of One Hundred Thousand Dollars ($100,000.00) per occurrence and One Hundred Thousand Dollars ($100,000.00) in the aggregate or (ii) combined single limit liability of Five Hundred Thousand Dollars ($500,000.00). Said policy shall include coverage for owned, non-owned, leased and hired vehicles. (iv) during the course of construction and improvement of the Project, a policy ofcontractor's/builder's risk insurance covering the full replacement value of the Project. (v) upon written request from the Agency to the Developer and to the Participant, the Developer and the Participant shall immediately procure and maintain such other insurance policies, and in such coverage amounts, as is required by the Agency, from time to time. All of the above policies of insurance shall be primary insurance and shall name the City and the Agency, and their officers, employees, and agents as additional insureds. The insurer shall waive all rights of subrogation and contribution it may have against the City and the Agency and their officers, employees and agents and their respective insurers. All of said policies of insurance shall provide that said insurance may not be amended or canceled without providing thirty (30) calendar days prior written notice by registered mail to the Agency. In the event any of said policies of insurance are canceled, the Developer and the Participant shall, prior to the cancellation date, submit new evidence of insurance in conformance with this Section to the Executive Director of the Agency. No work or improvement of the Site or operation of the Project shall commence until the Developer and the Participant have provided the Agency with certificates of insurance or appropriate insurance binders evidencing the above insurance coverages, and said certificates of insurance or binders are approved by the Agency. The policies of insurance required by this Agreement shall be satisfactory only if issued by companies qualified to do business in California, rated at least "A(vii)" or better in the most recent edition of Bests Insurance Rating Guide or an equivalent rating in The Key Rating Guide or in the Federal Register unless such requirements are modified or waived by the Executive Director of the Agency due to unique circumstances. .15 26 The Developer and the Participant shall provide in all contracts with contractors, subcontractors, architects and engineers (singularly, the "Subcontractor" and collectively, the "Subcontractors") who provide services in connection with the improvement of the Project that such persons shall maintain the same policies of insurance (the "Subcontractor Insurance Policy") required to be maintained by the Developer and by the Participant pursuant to this Section, unless waived by the Executive Director of the Agency. In connection with insurance required to be provided and maintained by a Subcontractor in connection with Section 4. I (a)(III)(y), the Agency shall accept the Subcontractor Insurance Policy provided and issued by the insurance carrier for such Subcontractor and will not require the Developer and/or the Participant to procure and maintain one (I) or more insurance policies and insurance coverage(s) for the services to be performed and/or goods to be delivered by one (I) or more Subcontractors in connection with the construction and development of the Project provided: (i) such Subcontractor Insurance Policy and insurance coverage at all times complies with the terms, covenants and conditions of this Section 4. I (a)(III)(y) of the Agreement; (ii) such Subcontractor Insurance Policy is procured and continuously maintained as required in this Section 4.I(a)(III)(y); (iii) the Agency is named as an additional insured on such Subcontractor. Insurance Policy; (iv) such Subcontractor Insurance Policy is not terminated or cancelled by the insurance carrier (or if terminated or cancelled is replaced by a new Subcontractor Insurance Policy without any gap or breach in insurance coverage, and at all times provided and issued by an insurance carrier acceptable to the Agency in accordance with this Section 4.1 (a)(III)(y)). Should any such Subcontractor Insurance Policy provided for by one (I) or more Subccontractors terminate, cancel or lapse prior to the term for which the Subcontractor must obtain and maintain such insurance policy in effect in accordance with this Section 4.l(a)(III)(y), the Developer and the Participant shall immediately procure, obtain and continuously maintain one (I) or more insurance policies as are required in this Section 4. I (a)(III)(y). Notwithstanding and provision to the contrary in this paragraph, the obligation of the Developer and the Participant to obtain and maintain one (I) or more insurance policies with the insurance coverage(s) and as otherwise provided for in this Section 4.I(a)(III)(y) shall not be waived, diminished or modified in any manner whatsoever. The Developer and the Participant agree that the provisions of this Section shall not be construed as limiting in any way the extent to which the Developer and/or the Participant may be held responsible for the payment of damages to any persons or property resulting from the activities of either the Developer and/or the Participant or the activities of any person or persons for which the Developer and/or the Participant is otherwise responsible. (z) RESERVED - NO TEXT (aa) The Developer and the Participant each for itself and their successors and assigns agrees that in the construction of the Project, the Developer and the Participant will not discriminate against any employee or applicant for employment because of sex, marital status, race, color, religion, creed, national origin or ancestry. (bb) The Developer and the Participant shall carry out their construction of the Project III conformity with all applicable federal and State of California laws, including, without .15 27 limitation, all applicable federal and/or state of California labor standards and requirements including, without limitation, the payment of prevailing wages as required by federal and/or State of California laws for the construction of the Project as a development on Agency acquired property in addition to the fmancing incentives as provided herein. (cc) The Developer and the Participant shall, at their own expense, secure or shall cause to be secured, any and all permits which may be required for such construction, development or work by the City or any other governmental agency having jurisdiction. The Agency shall cooperate in good faith with the Developer and with the Participant in the Developer's and Participant's efforts to obtain from the City or any other appropriate governmental agency any and all such permits applicable to the development of the Project. (dd) Officers, employees, agents or representatives of the Agency shall have the right of reasonable access to the Site, without the payment of charges or fees, during normal construction hours during the period of construction of the Project for the purpose of verifying compliance by the Developer and by the Participant with the terms of this Agreement. Such officers, employees, agents or representatives of the Agency shall be those persons who are so identified by the Executive Director of the Agency. Any and all officers, employees, agents or representatives of the Agency who enter the Site pursuant hereto shall identify themselves at the job site office upon their entrance onto the Site and shall at all times be accompanied by a representative of the Developer or of the Participant while on the Site; provided, however, that the Developer and the Participant shall make a representative of the Developer and of the Participant available for this purpose at all times during normal construction hours upon reasonable notice from the Agency. The Agency shall indenmify and hold the Developer and the Participant harmless from injury, property damage or liability arising out of the exercise by the Agency and/or the City of this right of access, other than injury, property damage or liability relating to the negligence of the Developer, the Participant or their officers, agents or employees. (ee) The Agency shall inspect relevant portions of the construction site prior to issuing any written statements reflecting adversely on the Developer's and/or the Participant's compliance with the terms and conditions of this Agreement pertaining to development of the Site. 4.2 Encumbrances and Liens. The Developer and the Participant shall not place and shall not allow to be placed on the Site any mortgage, trust deed, deed of trust, encumbrance or lien not otherwise authorized by this Agreement, and shall specifically pay materialmen and laborers in a timely manner so that no mechanics' liens or materialmens' liens are filed or recorded against the Agency Lots after title has been transferred to the Developer and to the Participant. The Developer and the Participant shall remove, or shall have removed, any levy or attachment made on the Site, or shall assure the satisfaction thereof. .15 28 4.3 Changes in Ownership Management and Control of the Developer and of the Participant - Assignment and Transfer. (a) Transfer as used in this Section 4.3, the term "Transfer" means: (1) Any total or partial sale, assignment or conveyance, or any trust or power, or any transfer in any other mode or form, by the Developer and/or by the Participant of more than a forty-nine percent (49%) interest (or series of such sales, assignments and the like which in the aggregate exceed a disposition of more than a forty-nine percent (49%) interest) with respect to their interests in this Agreement, the Site or the Project, or any part thereof or any interest therein or of the improvements constructed thereon, or any contract or agreement to do any of the same; or (2) Any total or partial sale, assignment, conveyance, or transfer in any other mode or form, of or with respect to any ownership interest of the Developer and/or of the Participant, their nonprofit corporation business organization (or series of such sales, assignments and the like which in the aggregate exceeded a disposition of more than a forty-nine percent (49%) interest); or (3) Any merger, consolidation, sale or lease of all or substantially all of the assets of the Developer and/or of the Participant in this Agreement, the Site or the Project (or series of such sales, assignments and the like which in the aggregate exceeded a disposition of more than a forty-nine percent (49%) interest); or (4) The leasing of part or all of the Site or the Project except for the sale of the Project upon its completion by the Developer and by the Participant to Low-Income Households. (b) This Agreement is entered into solely for the purpose of the redevelopment of the Site and the improvement of the Project and the subsequent operation and use of the Site by the Developer and by the Participant for construction of the New Homes for sale and occupancy by Low-Income Households in accordance with the terms of this Agreement. The Developer and the Participant recognize that the qualifications and identity of the Developer and of the Participant are of particular concern to the Agency, in view of: (1) the importance of the redevelopment of the Site to the general welfare of the community; and (2) the fact that a Transfer is for all practical purposes a transfer or disposition of the responsibilities of the Developer and of the Participant with respect to the redevelopment of the Site and the Project. The Developer and the Participant further recognize and acknowledge that it is because of the qualifications and identity of the Developer and of the Participant that the Agency is entering into this Agreement with the Developer and with the Participant, and, as a consequence, Transfers are permitted only as provided in this Agreement. .15 29 (c) The limitations on a Transfer as set forth in this Section 4.3 shall apply until the Completion of the Project. Except as expressly permitted in this Agreement, the Developer and the Participant represent and agree that they have not made nor shall they create or suffer to be made or created, any Transfer, either voluntarily or by operation of law without the prior written approval of the Agency until after the Completion of the Project. Any Transfer made in contravention of this Section 4.3 shall be voidable at the election of the Agency and such action shall then be deemed to be a default under this Agreement. After the Completion of the Project, certain other provisions of this Agreement shall nonetheless be applicable to subsequent conveyances of interest in the Site, or portions thereof, as provided in the Agency Regulatory Agreement. (d) The following types of a Transfer shall be permitted and approved by the Agency and are referred to herein as a "Permitted Transfer": (1) Any Transfer by the Developer and/or by the Participant creating a "Security Financing Interest" in the Site which conforms to the provisions of Section 4.4; (2) Any Transfer directly resulting from the foreclosure of a Security Financing Interest created by the Developer and/or by the Participant in the Site or the granting of a deed in lieu of foreclosure of a Security Financing Interest; (3) Any Transfer of any interest in the Developer and/or in the Participant, irrespective of the percentage of ownership to any non-profit affiliate of or other non- profit entity controlled by the Developer and/or by the Participant, or to any other entity in which the Developer and/or the Participant own a controlling interest. (e) No Permitted Transfer of this Agreement or any interest in the Site or the Project, by the Developer or by the Participant (other than a Permitted Transfer created pursuant to a Security Financing Interest under Section 4.3( d)) shall be effective unless, at the time of the Permitted Transfer, the person or entity to which such Transfer is made, shall expressly assume the obligations of the Developer and of the Participant under this Agreement and such person also agrees to be subject to the conditions and restrictions to which the Developer and the Participant are subject under this Agreement. Such an assumption of obligation shall be evidenced by a written instrument delivered to the Agency in a recordable form which is satisfactory to the Agency. (f) Prior to, on and after the Completion of the Project, the covenants of the Developer and the Participant as set forth in the Agency Regulatory Agreement shall run with the land for the term as provided in the Agency Regulatory Agreement. (g) Following the issuance of a Certificate of Completion, the Developer and the Participant shall be released by the Agency from any liability under this Agreement which may arise from a default of a Successor-in-Interest occurring after the date of such a Transfer; provided, however, that the covenants of the Developer and of the Participant as set forth in the Agency Grant Deed and the Agency Regulatory Agreement shall run with the land for the term as provided in the Agency Grant Deed and the Agency Regulatory Agreement. .15 30 4.4 Security Financing; Right of Holders. (a) Notwithstanding any provision of Section 4.3 to the contrary, mortgages, deeds of trust or any other form of lien required for any reasonable method of financing the construction and improvement of the Project and any security interest or lien in the Site, are permitted before the Completion of the Project. The Developer and the Participant shaH notify the Agency, in writing, in advance of any mortgage, deed of trust or other form of lien for financing if the Developer and the Participant propose to enter into the same before the Completion of the Project. The Developer and the Participant shaH not enter into any such other conveyance for construction financing without the prior written approval of the Agency, which approval the Agency shall grant if, given to a responsible financial or lending institution including, without limitation, banks, savings and loan institutions, credit unions, insurance companies, real estate investment trusts, pension programs and the like, or other acceptable persons or entities for the purpose of constructing the Project on the Site. (b) The Developer and the Participant shaH promptly notify the Agency of any mortgage, deed of trust or other refinancing, encumbrance or lien that has been created or attached thereto prior to completion of the construction of the improvements on the Site whether by voluntary act of the Developer or of the Participant or otherwise; provided, however, that no notice of filing of preliminary notices or mechanic's liens need be given by the Developer and by the Participant to the Agency prior to suit being filed to foreclose such mechanic's lien. (c) The words "mortgage" and "deed of trust" as used herein shall be deemed to include all other customary and appropriate modes of financing real estate construction and land development. (d) The holder of any mortgage, deed of trust or other security interest authorized by this Agreement shaH in no manner be obligated by the provisions of this Agreement to construct or complete the improvement ofthe Site or to guarantee such construction or completion. (e) Whenever the Agency shall deliver any notice or demand to the Developer and/or to the Participant with respect to any breach or default by the Developer and/or by the Participant in the completion of construction of the Project, or any breach or default of any other obligations which, if not cured by the Developer and/or by the Participant, entitle the Agency to terminate this Agreement or exercise its right to re-enter the Agency Lots, or a portion thereof under the Agency Grant Deed, the Agency shaH at the same time deliver to each holder of record of any mortgage, deed of trust or other security interest authorized by this Agreement a copy of such notice or demand. Each such holder shall (insofar as the rights of the Agency are concerned) have the right, at its option, to commence the cure or remedy of any such default and to diligently and continuously proceed with such cure or remedy, within one hundred twenty (120) calendar days after the receipt of the notice; and to add the cost thereof to the security interest debt and the lien of its security interest. If such default shall be a default which can only be remedied or cured by such holder upon obtaining possession, such holder shaH seek to obtain possession with diligence and continuity through a receiver or otherwise, and shaH remedy or cure such default within one hundred twenty (120) calendar days after obtaining possession; .15 31 provided that in the case of a default which cannot with diligence be remedied or cured, or the remedy or cure of which cannot be commenced, within such one hundred twenty (120) calendar day period, such holder shall have such additional time as is reasonably necessary to remedy or cure such default of the Developer and/or of the Participant. Nothing contained in this Agreement shall be deemed to permit or authorize such holder to undertake or continue the construction or completion of the Project (beyond the extent necessary to conserve or protect the improvements or construction already made) without first having expressly assumed the obligations of the Developer and of the Participant, as applicable, by written agreement satisfactory to the Agency. The holder in that event must agree to complete, in the manner provided in this Agreement, the improvements to which the lien or title of such holder relates and must submit evidence satisfactory to the Agency that it has the qualifications and financial responsibility necessary to perform such obligations. (f) In any case where one hundred eighty (180) calendar days after default by the Developer and/or by the Participant, the holder of any mortgage, deed of trust or other security interest creating a lien or encumbrance upon the Site or any portion thereof has not exercised the option to construct the applicable portions of the Project, or has exercised the option but has not proceeded diligently and continuously with construction, the Agency may purchase the mortgage, deed of trust or other security interest by payment to the holder of the amount of the unpaid debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer and/or by the Participant under the loan documents between the holder and the Developer, the Participant or any guaranty document executed by the Developer or the Participant. If the ownership of the Agency Lots has vested in the holder, the Agency, may, at its option but not its obligation be entitled to a conveyance from the holder to the Agency upon payment to the holder of an amount equal to the sum of the following: (I) The unpaid mortgage, deed of trust or other security interest debt, including principal, accrued and unpaid interest, late charges, costs, expenses and other amounts payable to the holder by the Developer and/or by the Participant under the loan documents between the holder and the Developer and/or the Participant, at the time title became vested in the holder (less all appropriate credits, including those resulting from collection and application of rentals and other income received during foreclosure proceedings). (2) All expenses, if any, incurred by the holder with respect to foreclosure. (3) The net expenses, if any (exclusive of general overhead), incurred by the holder as a direct result of the subsequent ownership or management of the Agency Lots, such as insurance premiums and real estate taxes. (4) The cost of any improvements made by such holder. (5) An amount equivalent to the interest that would have accrued on the aggregate on such amounts had all such amounts become part of the mortgage or deed of trust debt and such debt had continued in existence to the date of payment by the Agency. .15 32 (6) After expiration of the aforesaid one hundred eighty (180) calendar day period, the holder of any mortgage, deed of trust or other security affected by the option created by this Section, may demand, in writing, that the Agency act pursuant to the option granted hereby. If the Agency fails to exercise the right herein granted within sixty (60) calendar days from the date of such written demand, the Agency shall be conclusively deemed to have waived such right of purchase of the mortgage, deed of trust or other security interest. (g) In the event of a default or breach by the Developer and/or by the Participant of a mortgage, deed of trust or other security interest with respect to the Agency Lots (or any portion thereof) prior to the Completion of the Project (or any portion thereof), and the holder has not exercised its option to complete the development, the Agency may cure the default but is under no obligation to do so prior to completion of any foreclosure. In such event, the Agency shall be entitled to reimbursement from the Developer and from the Participant of all costs and expenses incurred by the Agency in curing the default. The Agency shall also be deemed to have a lien of the Agency as may arise under this Section 4.4(g) upon the Agency Lots or the Site (or any portion thereof) to the extent of such costs and disbursements; provided, however, any such lien in favor of the Agency as may arise under this Section 4.4(g) shall be subordinate and subject to mortgages, deeds of trust or other security instruments executed by the Developer and/or by the Participant for the purpose of obtaining the funds to construct and improve the Site as authorized herein. 4.5 Right of the Agency to Satisfy Other Liens on the Agency Lots after Conveyance of Title to the Developer and to the Participant. After the conveyance of title to the Agency Lots by the Agency to the Developer and to the Participant and prior to the Completion of the Project, and after the Developer and the Participant have had a reasonable time to challenge, cure or satisfy any unauthorized liens or encumbrances on the Agency Lots, the Agency shall after one hundred twenty (120) calendar days prior written notice to the Developer and to the Participant have the right, but not the obligation, to satisfy any such liens or encumbrances; provided, however, that nothing in this Agreement shall require the Developer and/or the Participant to payor make provisions for the payment of any tax, assessment, lien or charge so long as the Developer and the Participant in good faith shall contest the validity or amount thereof, and so long as such delay in payment shall not subject the Site, or any portion thereof, to forfeiture or sale. 4.6 Certificate of Completion. (a) Following the written request therefore by the Developer and by the Participant for the issuance by the Agency of the Certificate of Completion upon the completion of the construction and sale of the four (4) New Homes by the Developer and by the Participant upon the Agency Lots, the Agency shall furnish to the Developer and to the Participant a Certificate of Completion for the Agency Lots and the New Homes substantially in the form as set forth in Exhibit "F". .15 33 (b) The Agency shall not unreasonably withhold the issuance of the Certificate of Completion. The Certificate of Completion shall be, and shall so state, that it is a conclusive detennination of satisfactory completion of all of the work of improvement of the Project and the sale of the New Homes in the manner as required by this Agreement. After the recordation of the Certificate of Completion, any person then owning or thereafter purchasing, leasing or otherwise acquiring any interest in the Agency Lots and the New Homes shall not (because of such ownership, purchase, lease or acquisition) incur any obligations or liability under this Agreement, except that such person shall be bound by any covenants contained in the Agency Grant Deed, the Agency Regulatory Agreement and any Agency Downpayment Assistance. (c) Any Certificate of Completion shall be in such fonn as to pennit it to be recorded in the Recorder's Office of San Bernardino County wherein the Agency Lots are located. (d) If the Agency refuses or fails to furnish the Certificate of Completion after written request from the Developer and from the Participant to the Agency, the Agency shall, within fifteen (15) calendar days after receipt of the written request or within three (3) business days after the next regular meeting of the governing body of the Agency, whichever date is the later to occur, provide to the Developer and to the Participant a written statement setting forth the reasons with respect to the Agency's refusal or failure to furnish the requested Certificate of Completion. The statement shall so contain the Agency's opinion of the actions that the Developer and the Participant must undertake to obtain the requested Certificate of Completion. If the reason for such refusal is confined to the immediate unavailability of specific items or materials for construction or landscaping at a price reasonably acceptable to the Developer and to the Participant or other minor building "punch-list" items, the Agency may issue its Certificate of Completion upon the posting of a bond, cash or irrevocable letter of credit, reasonably approved as to fonn and substance by the Agency General Counsel, and obtained by the Developer and/or by the Participant in an amount representing the fair value of the work not yet completed as reasonably detennined by the Agency. For the purposes of the preceding sentence, the words "minor building punch-list item" refers to Project construction items which do not in the aggregate exceed a total cost of ten percent (10%) of the amount of the approved construction budget for the New Homes. If the Agency shall have failed to provide such written statement within the foregoing period of time, the Developer and the Participant shall be deemed conclusively and without further action of the Agency to have satisfied the requirements of this Agreement with respect to the Agency Lots and the New Homes the same as if a Certificate of Completion had been issued therefore. 4.7 (RESERVED - NO TEXT] 5. USE OF THE SITE. 5.1 Use ofthe Agency Lots. The Developer and the Participant hereby covenant and agree, each for itself and their successors and assigns, that the Agency Lots shall be developed, used and maintained as single- family housing units for occupancy by Low-Income Households in the manner and for the period of time as more fully set forth in the Agency Grant Deed (Exhibit "C") and the Agency Regulatory Agreement (Exhibit "0" herein). As further set forth in the Recitals to this .15 34 Agreement relating to the use of HOME funds pursuant to the various federal statutes and regulations set forth therein; the maximum purchase price of any New Home to be paid by a Qualified Homebuyer that is constructed on the Agency Lots or the Site shall not exceed ninety- five percent (95%) of the area median purchase price for comparable sales as determined by the Agency from time-to-time based upon County of San Bernardino statistical data. 5.2 Disposition of the Agency Lots to Qualified Homebuyers. (a) Upon the completion of each New Home by the Developer and by the Participant on each Agency Lot, the Developer and the Participant shall transfer and sell all of its rights, title and interest in the Agency Lots, as improved with the Completed New Home to a Qualified Homebuyer designated by the Developer and by the Participant. The Completed New Home Purchase Price payable by such Qualified Homebuyer to the Developer and to the Participant for the Completed New Home shall be an amount as referenced in Section 5.1. (b) The disposition of each Completed New Home to the Qualified Homebuyer designated by the Developer and by the Participant shall take place through a New Home Escrow to be administered by the Escrow Holder. The Escrow Holder shall promptly confirm to the \ parties the escrow number and the title insurance order number assigned to such escrow. The Escrow Holder shall be a title company or escrow service as acceptable to the Developer, the Participant and the Qualified Homebuyer. (c) The Developer and the Participant shall deliver to the Agency the information relating to each Qualified Homebuyer described in Section 2(d) of the Agency Regulatory Agreement, within five (5) calendar days following the designation by the Developer and by the Participant of such Qualified Homebuyer as the prospective purchaser of the Completed New Home. Concurrently, upon the delivery by the Developer and by the Participant to the Agency of the household income and occupancy information described in Section 2(d) of the Agency Regulatory Agreement, the Developer and the Participant shall also request that the Agency issue its Notice of Agency Concurrence with respect to the Qualified Homebuyer designated by the Developer and by the Participant. Within ten (10) calendar days following its receipt of such written information and request from the Developer and from the Participant relating to the Qualified Homebuyer, the Agency shall provide the Developer and the Participant with a preliminary confirmation of the approval or rejection of the income and household occupancy qualifications of the proposed Qualified Homebuyer. In the event that the Agency may request additional information relating to the confirmation of the matters described in the preceding sentence with respect to the Qualified Homebuyer, the Developer and the Participant shall cause such additional information to be provided to the Agency as promptly as feasible. The Executive Director of the Agency shall issue a preliminary determination of his concurrence of the eligibility of the Qualified Homebuyer within ten (10) calendar days following receipt of such completed income and household occupancy information. Provided that the proposed Qualified Homebuyer also qualifies to obtain purchase money mortgage fmancing for the purchase of the Completed New Home with terms and costs not in excess of that amount as required for such Qualified Homebuyer, as evidenced by a written mortgage lender's prequalification for such Qualified Homebuyer within sixty (60) calendar days following the Executive Director of the Agency's preliminary concurrence of the eligibility of the Qualified Homebuyer designated by the Developer and the Participant, the Executive Director of the Agency shall issue a Notice of .15 35 Agency Concurrence with respect to such Qualified Homebuyer to the Escrow Holder. In the event that the Agency may later discover that the written information provided to it in support of a request for issuance of a Notice of Agency Concurrence is false or incorrect in any material respect, then in such event the Agency may exercise all of its remedies to enforce the provisions of this Agreement and the Agency Regulatory Agreement, if applicable, notwithstanding the fact that a Notice of Agency Concurrence may have been issued in favor of a particular Qualified Homebuyer. Upon the completion of each New Home, the Developer and the Participant shall sell such New Home to a Qualified Homebuyer which New Home shall be transferred to such Qualified Homebuyer through a New Home Escrow. The Agency shall not be a party to any such New Home Escrow. Notwithstanding the preceding sentence, the Developer and the Participant shall instruct the Escrow Holder to comply with the provisions of Section 5.2(e) of this Agreement and at the close of each New Home Escrow, the Escrow Holder shall provide the Agency with a copy of both the "seller's" and the "buyer's" closing statement, together with a complete copy of the real estate sales agreement between the Developer and the Participant with the Qualified Homebuyer for the New Home. (d) The Developer, the Participant and the Agency mutually covenant and agree to execute all necessary or appropriate written escrow instructions relating to the application of this Agreement to a particular New Home Escrow as may be. reasonably requested by the Escrow Holder in connection with the administration of a New Home Escrow. (e) Each New Home Escrow shall close upon satisfaction of the applicable escrow conditions by and between the Developer and the Participant as the seller and such Qualified Homebuyer as the buyer as consistent with this Agreement when the Escrow Holder confirms that: (i) It IS in receipt of the Notice of Agency Concurrence for the Qualified Homebuyer in the case of the Completed New Home; (ii) it has received and is in a position to record a fully executed form of the Agency Regulatory Agreement for the Completed New Home; (iii) it is in a position to provide the Agency within a policy of title insurance in favor of the Agency which insures that the Agency Regulatory Agreement is subject only to the lien for property taxes and the lien in the Completed New Home of the senior purchase money mortgage lender to the Qualified Homebuyer in the case of the Completed New Home; (iv) the Developer and the Participant have provided the Agency with a preliminary indication ofthe Completed New Home; (v) the Qualified Homebuyer has executed all of the Agency documents relating to the Agency Downpayment Assistance, if any, provided by the Agency to such Qualified Homebuyer pursuant to Section 5.5 ofthis Agreement; .15 36 (vi) it is in receipt of a grant deed (the "New Home Grant Deed") executed and acknowledged by the Developer and by the Participant, and executed, acknowledged and accepted by the Qualified Homebuyer, wherein the Developer and the Participant sell, transfer, convey, grant and assign all of their rights, title and interest in the Completed New Home to the Qualified Homebuyer, and the Qualified Homebuyer accepts the New Home Grant Deed; (vii) it is in a position to record the Additional Developer/Participant Downpayment Assistance documentation, if applicable; (viii) it is in a position to comply with such other instructions of the Developer, the Participant, the Qualified Homebuyer and the senior purchase money mortgage lender relating to the Completed New Home. (f) In the event that a New Home Escrow may fail to close for any reason, the Developer and the Participant may cause such New Home Escrow to be cancelled without further notice of instruction to the Agency. The Developer and the Participant shall pay for all of the costs and expenses of such a cancelled New Home Escrow and shall indemnify, defend and hold the Agency harmless from any claim, loss or damage which may be asserted or arise against the Agency by a third party as a result of the cancellation of any such escrow. (g) Within sixty (60) calendar days following the close of a New Home Escrow, the Developer and the Participant shall deliver its New Home Sales Costs Certificate to the Agency, together with adjustments, if any. 5.3. Maintenance of the Agency Lots. The Developer and the Participant covenant and agree each for itself, their successors, and assigns to maintain each of the Agency Lots in a good condition free from any accumulation of debris or waste material, subject to normal construction job-site conditions, and shall maintain in a neat, orderly, healthy and good condition the landscaping on each Agency Lot required to be planted in accordance with the Scope of Development. In the event the Developer, the Participant, or their successors or assigns, fails to perform the maintenance as required herein, the Agency shall have the right, but not the obligation, to enter any Agency Lot and undertake such maintenance activities. In such event, the Developer and the Participant shall reimburse the Agency for all reasonable sums incurred by it for such maintenance activities. The obligation of the Developer and of the Participant under this Section 5.3 with respect to the Agency Lots shall be discharged for each Agency Lot on the applicable Delivery Date for each Completed New Home. 5.4 Project Development Cost Pro Forma. (a) As of the Effective Date of this Agreement, the Developer and the Participant have presented the Agency with a Project development cost pro forma (the "Pro Forma"). The Pro Forma as submitted to the Agency sets forth the line item expenditures anticipated to be paid .[5 37 and incurred by the Developer and the Participant in development of the New Homes. As set forth in the Pro Forma, all fees payable to the Developer, the project manager, the construction manager and the builder of the New Homes shall not exceed the dollar amounts set forth in the Pro Forma and shall be payable solely from (i) the amounts as available but not to exceed the line item budget dollar figure for each such item and (ii) the unexpended contingency amount reasonably anticipated by the Developer as necessary for the development of the New Homes. All fees and reimbursements payable to the Developer, the project manager, the construction manager and the builder shall at all times be subordinate to the payment of the direct construction costs and the indirect costs as noted in the Pro Forma as so noted in the Pro Forma. (b) Upon the request of the Agency (but not more frequently than once every ninety (90) calendar days) and at such other times as the Developer and the Participant may in their discretion elect, the Developer and the Participant shall modify or update the previously submitted Pro Forma. Upon the written request by the Agency, the Developer and the Participant shall deliver to the Agency the updated and revised Pro Forma within ten (10) calendar days from receipt by the Developer and by the Participant of such written Agency request. (c) The Developer and the Participant shall maintain accounting books and records of Project development costs incurred in accordance with generally accepted principles of business accounting. The Agency and its accountants and auditors shall have the right to conduct, at its expense, an inspection and review of the accounting books and records of the Developer and of the Participant relating to the Project, upon the written request of the Agency which shall be given to the Developer and to the Participant with not less than seventy-two (72) hours' prior written notice. The Developer and the Participant shall cooperate with the Agency in the production of its accounting books and records as reasonably required by the Agency and its auditors to conduct an audit of actual Project development costs. 5.5 Agency Downpayment Assistance. (a) As of the Effective Date of this Agreement, the Agency shall appropriate and reserve the sum of Two Hundred Forty Thousand Dollars ($240,000.00), in the aggregate, from the HOME Fund to provide Agency Downpayment Assistance to Qualified Homebuyers of each of the four (4) Completed New Homes. Agency Downpayment Assistance may hereafter be provided to Qualified Homebuyers upon the close of each New Home Escrow for a Completed New Home, subject to the terms and conditions of the Agency's HAP Program and the underwriting and credit evaluation by the Agency of each such Qualified Homebuyer. (b) Provided that a Qualified Homebuyer is determined by the Agency to be eligible for Agency Downpayment Assistance, as part of its acquisition of a Completed New Home upon the close of the New Home Escrow, such Qualified Homebuyer shall execute and/or acknowledge such instruments, documents and agreements, as reasonably requested by the Agency. (c) The amount, if any, of the Agency Downpayment Assistance, which may be provided to one (I) or more Qualified Homebuyers shall not exceed more than Sixty Thousand .IS 38 Dollars ($60,000.00) in connection with the sale by the Developer and by the Participant to the Qualified Homebuyer and the purchase by the Qualified Homebuyer from the Developer and from the Participant of the Completed New Home, and shall be disbursed for the account of such Qualified Homebuyer through the applicable New Home Escrow for each Completed New Home. (d) In the event a Qualified Homebuyer shall need additional downpayment assistance in the form of the Additional Developer/Participant Downpayment Assistance to purchase the Completed New Home upon the close of the New Home Escrow should the Agency Downpayment Assistance and the outstanding principal amount of the primary mortgage loan (the "First Deed of Trust Loan") to be made by a lender to the Qualified Buyer and secured by a first deed of trust or mortgage encumbering the Completed New Home, in the aggregate, be insufficient to permit the Qualified Homebuyer to purchase the Completed New Home upon the close of the New Home Escrow, the Developer and the Participant shall pay, assume, guarantee, or be responsible for the payment of, or otherwise provide for the funding of the Additional Developer/Participant Downpayment Assistance (for the benefit of the Qualified Homebuyer) needed by such Qualified Homebuyer to purchase such Completed New Home and to close the New Home Escrow for such Completed New Home. (e) Notwithstanding any other provision of this Section 5.5, the Agency shall have no obligation to grant or to fund any amount other than the Agency Downpayment Assistance grant or loan to a Qualified Homebuyer in connection with the purchase by the Qualified Homebuyer ofa Completed New Home. 5.6 Participation in New Home Profit for Each New Home. (a) For the purposes of this Section 5.6, the words "New Home Profit" for each New Home shall mean and refer to a sum which shall be determined in accordance with the following formula: (Completed New Home Purchase Price) - (New Home Sales Costs) = New Home Profit (b) Within five (5) calendar days prior to the New Home Closing for each Completed New Home sold by the Developer and by the Participant to the Qualified Homebuyer, the Developer and the Participant shall prepare and provide to the Agency and to the EscroW Agent for the New Home Escrow a certificate estimating the New Home Profit for the Completed New Home being sold by the Developer and by the Participant to the Qualified Homebuyer. In connection with each New Home Escrow, should a Qualified Homebuyer need the Additional Downpayment Assistance to purchase the Completed New Home (in excess of the Agency's Downpayment Assistance being paid by the Agency for the benefit of the Qualified Homebuyer to the Escrow Agent ofthe New Escrow and of the proceeds from the First Deed of Trust Loan), such excess shall be paid by the Developer and by the Participant from the New Home Profit (in effect and earned by the Developer and by the Participant on the close of such New Home Escrow) in connection with such Completed New Home. As may be required on a case-by-case basis to provide for the funding of the purchase of New Home by a Qualified Homebuyer, the Developer and the Participant may provide for Additional Developer/Participant Downpayment Assistance to such Qualified Homebuyer to be funded either in whole or in part from the .15 39 proceeds that otherwise would have been payable to the Developer and to the Participant as the New Home Profit. At the close of the New Home Escrow, the Escrow Agent for the New Home Escrow shall pay fifty percent (50%) of the New Home Profit less the Additional Developer/Participant Downpayment Assistance, if any (the "Restated New Home Profit"), to the Developer and fifty percent (50%) of the Restated New Home Profit to the Participant. (c) Within sixty (60) calendar days following the close of a New Home Escrow, the Developer and the Participant shall also prepare and deliver to the Agency its New Home Sales Costs Certificate for such Completed New Home. Notwithstanding any other provision in this Agreement to the contrary, the Agency, at any time, shall have the right to conduct and complete an audit (the "Audit") of the information presented in each New Home Sales Costs Certificate, the books and records of the Developer and of the Participant in connection with and relating to the acquisition of each Agency Lot, the development, construction and improvement of each Completed New Home, the marketing and sale of each Completed New Home by the Developer and by the Participant to a Qualified Homebuyer, and all other financial information, New Home Sales Costs projections, Developer and Participant profit projections in connection with the sale by the Developer and by the Participant to a Qualified Homebuyer of each of the Completed New Homes, and any other financial information or other information relating to or in connection with the Project, at the expense of the Agency in accordance with generally accepted accounting principles. The Developer and the Participant shall cooperate with the Agency and its agents in the conduct of any such audit, including, without limitation, the delivery to the Agency, upon request, of underlying construction or service contracts and invoices for services performed or products delivered to the Developer and/or to the Participant by third parties relating to the Project. 6. ENFORCEMENT. 6.1 General Conditions (a) In the event that either the Acquisition Conditions or the Agency Conditions have not been approved, disapproved or waived by the parties, as the case may be, prior to the Closing by the applicable date set forth in the Schedule of Performance, then the remedies of the parties shall be as set forth in Section 3.10 of this Agreement which may result in a termination of this Agreement pursuant to Section 3.10 therein. In the event that a breach or default may occur prior to the Close of Escrow pursuant to this Agreement, and subject to the extension of time set forth in Section 7.5 hereof, failure or delay by any party to perform any term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if a party otherwise in default commences to cure, correct or remedy such default within thirty (30) calendar days after receipt of written notice specifying such default and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such party shall not be deemed to be in default hereunder. (b) From and after the Close of Escrow and subject to the extensions of time set forth in Section 7.5 hereof, failure or delay by any party to perform any term or provision of this Agreement shall constitute a default under this Agreement; provided, however, that if a party otherwise in default commences to cure, correct or remedy such default within thirty (30) .15 40 calendar days after receipt of written notice specifying such default and shall diligently and continuously prosecute such cure, correction or remedy to completion (and where any time limits for the completion of such cure, correction or remedy are specifically set forth in this Agreement, then within said time limits), such party shall not be deemed to be in default hereunder. (c) The injured party or injured parties shall give written notice of default to the party or parties in default, specifying the default complained of by the nondefaulting party or nondefaulting parties. Delay in giving such notice shall not constitute a waiver of any default nor shall it change the time of default. All notices of such defaults that pertain to any two (2) parties to this Agreement shall also be given to the third party to this Agreement whether or not such third party is then in default under this Agreement. (d) Any failure or delays by any party in asserting any of their rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies. Delays by any party in asserting any of their rights and remedies shall not deprive any party of their right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies. (e) Both the Developer and the Participant shall be separately liable and responsible for such defaults as each may have separately or jointly caused or created pursuant to this Agreement, and, except for the rights of the Agency as may be exercised pursuant to Section 6.6 hereof which may be enforced against the joint interests of the Developer and/or of the Participant in furtherance of the right of the Agency to re-enter, repossess and revert the Agency Lots to the Agency regardless of whether the Developer and/or the Participant may have caused or created the default under such circumstances, no other default by either the Developer and/or the Participant shall cause the other of said party to be liable for the actions of the other party. 6.2 Legal Actions. (a) In addition to any other rights or remedies, any party may institute legal action to cure, correct or remedy any default, to recover damages for any default, or to obtain any other remedy consistent with the purposes of this Agreement. Such legal actions must be instituted in the Superior Court of the County of San Bernardino, San Bernardino District, State of California, or in the Federal District Court in the Central District of California. (b) The laws of the State of California shall govern the interpretation and enforcement of this Agreement. (c) In the event that any legal action is commenced by the Developer and/or by the Participant against the Agency, service of process on the Agency shall be made by personal service upon the Executive Director of the Agency, or in such other manner as may be provided bylaw. (d) In the event that any legal action is commenced by the Agency against the Developer and/or the Participant, service of process on the Developer and/or on the Participant, as applicable, shall be made by personal service on the Chief Executive Officer, Chairman or the owner's authorized representative for service of process and at such address as provided in .15 41 Section 7.2 hereof, or as may be specified in written notice to the Agency in the manner permitted by said Section 7.2, or in such other manner as may be provided by law, and such service of process shall be valid whether made within or without the State of California. The Agency shall also provide a notice of the commencement of any such legal action to the party that is not named in such legal action in the event such legal action is filed as to only one of the other parties to this Agreement. 6.3 Rights and Remedies are Cumulative. Except with respect to any rights and remedies expressly declared to be exclusive in any Section of this Agreement as the same relates to a failure of conditions precedent occurring before the Close of Escrow, the rights and remedies of the parties as set forth in Section 6.1 through Section 6.8, and specifically this Section 6.3, are cumulative and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party. 6.4 Damages. If any party or parties default with regard to any provision of this Agreement, the nondefaulting party or parties shall serve written notice of such default upon the defaulting party or parties. If the defaulting party or parties do not diligently commence to cure such default after service of the notice of default and promptly complete the cure of such default within a reasonable time, not to exceed thirty (30) calendar days (or such shorter period as may otherwise be specified in this Agreement for default), after the service of written notice of such a default, then the nondefaulting party or parties shall be thereupon entitled to exercise all remedies as provided in this Agreement. In the event that a default relates to a matter arising after the Close of Escrow the defaulting party or parties shall be liable to the other party or parties for damages caused by such default. As further provided in Section 6.1 ( e), neither the Developer nor the Participant shall be liable for the defaults caused by the other of said parties except pursuant to the provisions of Section 6.6 whereby a default by either of said parties will enable the Agency to exercise the remedies of said Section 6.6 against both the Developer and the Participant as their interests may appear in the Agency Lots. 6.5 [RESERVED-NO TEXT) 6.6 Right to Re-enter, Repossess and Revert. (a) The Agency shall, upon thirty (30) calendar days notice to the Developer and to the Participant which notice shall specify this Section 6.6, have the right, at its option, to re-enter and take possession of all or any portion of the Agency Lots, together with all improvements thereon, and to terminate and revert to the Agency the estate conveyed to the Developer and to the Participant hereunder, if after conveyance of title, the Developer and/or the Participant (or with respect to their interests in the Agency Lots or this Agreement) shall: (I) Fail to commence construction of all or any portion of the improvements as required by this Agreement for a period of sixty (60) calendar days after written notice to proceed from the Agency; provided that the Developer and the Participant shall not .15 42 have obtained an extension or postponement to which the Developer and the Participant may be entitled pursuant to Section 7.5 hereof, if applicable; or (2) Abandon or substantially suspend construction of all or any portion of the improvements for a period of sixty (60) calendar days after written notice of such abandonment or suspension from the Agency; provided that the Developer shall not have obtained an extension or postponement to which the Developer and the Participant may be entitled to pursuant to Section 7.5 hereof, if applicable; or (3) Assign or attempt to assign this Agreement, or any rights herein, or transfer, or suffer any involuntary transfer, of the Agency Lots or the Site or the Project or any part thereof, in violation of this Agreement, and such violation shall not have been cured within thirty (30) calendar days after the date of receipt of written notice thereof from the Agency to the Developer and to the Participant. (b) The thirty (30) calendar day written notice specified in this Section shall specify that the Agency proposes to take action pursuant to this Section and shall specify which of the obligations of the Developer and of the Participant set forth in Subsections (I) through (3) herein have been breached. The Agency shall proceed with its remedy set forth herein only in the event that the Developer and/or the Participant continue in default of said obligation or obligations for a period of thirty (30) calendar days following such notice or, upon commencing to cure such default, fails to diligently and continuously prosecute said cure to satisfactory conclusion. (c) The right of the Agency to reenter, repossess, terminate and revert shall be subject and subordinate to, shall be limited by and shall not defeat, render invalid or limit: (I) Any mortgage, deed of trust or other security interest permitted by this Agreement; (2) Any rights or interests provided in this Agreement for the protection of the holders of such mortgages, deeds of trust or other security interests; (3) Any leases, declarations of CC&Rs, easement agreements or other recorded documents applicable to the Site. (d) The Agency Grant Deed shall contain appropriate references and provisions to give effect to the Agency's rights, as set forth in this Section under specified circumstances prior to the delivery of the Certificate of Completion of the Project with respect to such portion, to reenter and take possession of such portion, or any part thereof, with all improvements thereon, and to terminate and revert in the Agency the estate conveyed to the Developer and to the Participant. (e) Upon the reinvesting in the Agency of title to one or more of the Agency Lots, or any part thereof, as provided in this Section, the Agency shall, pursuant to its responsibilities under State of California law, use its best efforts to resell the Agency Lots, or any part thereof, as soon and in such manner as the Agency shall fmd feasible and consistent with the objectives of such law, to a qualified and responsible party or parties (as determined by the Agency) who will assume the obligations of making or completing the Project, or such other improvements in their .15 43 stead as shall be satisfactory to the Agency and in accordance with the uses specified for the Agency Lots and/or the Site, or any part thereof. Upon such resale of the Agency Lots and/or the Site, or any part thereof, the proceeds thereof shall be applied: (I) First, to make any payment made or necessary to be made to discharge or prevent from attaching or being made any subsequent encumbrances or liens due to obligations incurred with respect to the making or completion of the agreed improvements or any part thereof on the Site or any portion thereof; next to reimburse the Agency on its own behalf or on behalf of the City for all actual costs and expenses incurred by the Agency and the City, including, but not limited to, customary and reasonable fees or salaries to third party personnel engaged in such action, including the Agency's attorneys fees, in connection with the recapture, management and resale of the Site or any portion thereof; all taxes, assessments and water and sewer charges paid by the City and/or the Agency with respect to the Site or any portion thereof; any amounts otherwise owing to the Agency by either the Developer and/or the Participant and their successor transferee; and (2) Second, to the extent that any and all funds which are proceeds from such resale are thereafter available, to reimburse the Developer and/or the Participant, as applicable, or their successor transferee, up to the amount equal to the sum of the total costs incurred for the development of the Agency Lots, or applicable part thereof, or for the construction of the improvements thereon including, but not limited to, costs of carry, taxes and items set forth in the Developer's cost statement which shall be submitted to and approved by the Agency. (3) Any balance remaining after the foregoing application of proceeds shall be retained by the Agency. (f) The right of the Agency to re-enter, repossess and revert the Agency Lots to the Agency in the manner as provided herein shall be effective and enforceable against both the Developer and the Participant regardless of which of said parties had caused the default pursuant to this Agreement so long as a default by either the Developer and/or the Participant has not cured in the manner as required by this Agreement. 6.7 Mutual Indemuification. The Developer and the Participant agree to indemnify and hold the City and the Agency, and their officers, employees and agents, harmless from and against all damages, judgments, costs, expenses and fees arising from or related to (i) any act or omission of the Developer and/or the Participant in performing their obligations hereunder, (ii) the approval and execution of this Agreement by the Agency, and (iii) the adoption by the City of the resolution relative to the Agency approval and execution of this Agreement. The Agency agrees to indemnify and hold the Developer and/or the Participant and their officers, employees and agents, harmless from and against all damages, judgments, costs, expenses and fees arising from or related to any act or omission of the Agency in performing its obligations hereunder. .15 44 6.8 Attorneys' Fees. In the event of litigation between the parties arising out of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and other costs and expenses incurred, including such fees and costs incurred on appeal, in addition to whatever other relief to which it maybe entitled. As used in the preceding sentence, the words "reasonable attorneys' fees" in the case of the Agency, include the salary and costs payable to lawyers employed or retained by the Agency, who provide legal counsel to the Agency in such litigation as allocated on an hourly basis. 7. MISCELLANEOUS. 7.1 Governing Law. The laws ofthe State of California shall govern the interpretation and enforcement of this Agreement. 7.2 Notices. Notices, demands, and communications between the Agency, the Developer and the Participant shall be sufficiently given if personally delivered or dispatched by registered or certified mail, postage prepaid, return receipt requested, to the following addresses: If to the Agency: Redevelopment Agency of the City of San Bernardino Attn.: Executive Director 20 I North "E" Street, Suite 30 I San Bernardino, California 92401 If to the Developer: Arroyo Valley Community Economic Development Corporation Attn.: Antonio Dupre, Sr., President P.O. Box 1599 San Bernardino, California 92402 If to the Participant: Inland Empire Concerned African American Churches Attn.: Ray Turner, Chairman 1583 West Union Street San Bernardino, California 92411 Any notice shall be deemed to have been received as of the earlier time of actual receipt by the addressee thereof or the expiration of forty-eight (48) hours after depositing of such notice in the United States Postal System in the manner described in this Section. Such written notices, demands, and communications may be sent in the same manner to such other addresses as a party may from time to time designate by mail. Any party to this Agreement may change or modifY their address for the delivery of notices as set forth above provided that for such changes to be effective as to the other parties, notice shall be duly provided to the other parties to this Agreement in the manner as required herein. .15 45 7.3 Conflicts ofInterest. No member, official, or employee of the Agency shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official, or employee participate in any decision relating to this Agreement which affects his personal interests or the interests of any corporation, partnership, or association in which he is, directly or indirectly, interested. 7.4 Nonliability of Agency Officials and Employees. No member, official, employee or consultant of the Agency or City shall be personally liable to the Developer and/or to the Participant, or any Successor-In-Interest ofthe Developer or of the Participant, in the event of any default or breach by the Agency or for any amount which may become due to the Developer, the Participant or to their successor, or on any obligations under the terms of this Agreement, except for gross negligence or willful acts of such member, official, employee or consultant. 7.5 Enforced Delay: Extension of Time of Performance. In addition to specific provisions of this Agreement, performance by any party hereunder shall not be deemed to be in default, or considered to be a default, where delays or defaults are due to the force majeure events of war, insurrection, strikes, lockouts, riots, floods, earthquakes, fires, casualties, acts of God, acts of the public enemy, epidemics, quarantine restrictions, freight embargoes or lack of transportation, weather-caused delays, inability to secure necessary labor, materials or tools, delays of any contractors, subcontractor or supplier, which are not attributable to the fault of the party claiming an extension of time to prepare or acts or failure to act of any public or govemmental agency or entity (provided that acts or failure to act of the City or the Agency shall not extend the time for the Agency to act hereunder except for delays associated with lawsuit or injunction including, but without limitation to, lawsuits pertaining to the approval of the Agreement, and the like). Any denial by the City of a building permit, grading permit or such other ministerial approval that is based upon failure of the Developer, the Participant or their authorized representatives to provide adequate information and a completed application with all exhibits, drawings, maps and attachments in the form and quality as typically received by the City from other housing developers shall not entitle the Developer and/or the Participant to claim any extensions of time pursuant to this Section 7.5. An extension of time for any such force majeure cause shall be for the period of the enforced delay and shall commence to run from the date of occurrence of the delay; provided, however, that the party which claims the existence of the delay has first provided the other party with written notice of the occurrence of the delay within ten (10) calendar days after the commencement of such occurrence of delay. In addition to such force majeure provisions as specified in the preceding paragraph, in the event the Developer and/or the Participant have submitted the building plans and the site plans for the development of the New Homes on the Agency Lots and such submittal is deemed complete as evidenced in writing from the City for all purposes in connection with the review thereof by the City, and within sixty (60) calendar days thereafter the City has not either (i) issued building permits for construction of the four (4) New Homes or (ii) provided a written statement as to the inadequacy of the submittal which was previously confirmed by the City as .15 46 being deemed complete, the Developer and the Participant, subject to providing written notice to the Agency of the occurrence of such City caused delay, shall be entitled to an extension of time for the Close of Escrow on a day-for-day basis for each day that the City has delayed the issuance of either the building permits or the written statement containing the reasons for the subsequently determined inadequacy of the submittal of the building plans and the site plans. An extension of time for any such City caused delay shall be for the period of time equal to the City caused delay and shall commence to run from the date of occurrence of the City caused delay; provided, however, that the Developer and the Participant in claiming the existence of the City caused delay has first provided to the Agency written notice of the occurrence of the City caused delay within ten (l0) calendar days after the commencement of such occurrence of the City caused delay. The Developer and the Participant (together, and in the aggregate) shall be entitled to claim only one (I) event as a City caused delay pursuant to the provisions of this paragraph; provided, however, that any enforced delay pursuant to the preceding paragraph shall not limit nor preclude the rights of the Developer and of the Participant (together, and in the aggregate) to claim one (I) event as a City caused delay pursuant to this paragraph. The inability of the Developer and/or the Participant to obtain a satisfactory commitment from a construction lender or to satisfy any other condition of this Agreement relating to the acquisition of the Site and the development of the Project shall not be deemed to be a force majeure event or otherwise provide grounds for the assertion of the existence of a delay under this Section 7.5. The parties hereto expressly acknowledge and agree that changes in either general economic or regulatory conditions or changes in the economic or regulatory assumptions of any of them which may have provided a basis for entering into this Agreement and which occur at any time after the execution of this Agreement, are not force majeure events and do not provide any party with grounds for asserting the existence of a delay in the performance of any covenant or undertaking which may arise under this Agreement. Each party expressly assumes the risk that changes in general economic or regulatory conditions or changes in such economic assumptions relating to the terms and covenants of this Agreement could impose an inconvenience or hardship on the continued performance of such party under this Agreement, but that such inconvenience or hardship is not a force majeure event and does not excuse the performance by such party of its obligations under this Agreement. 7.6 Books and Records. (a) Maintenance of Books and Records. The Developer and the Participant shall prepare and maintain all books, records and reports necessary to substantiate the compliance by the Developer and by the Participant with the terms of this Agreement or otherwise as may be reasonably required by the Agency. (b) Right to Inspect. The Agency shall have the right, upon not less than seventy-two (72) hours notice, at all reasonable times, to inspect the books and records of the Developer and of the Participant pertinent to the purposes of this Agreement. Said right of inspection shall not extend to documents privileged under attorney-client or other such privileges. .15 47 7.7 Modifications. Any alterations, changes or modifications of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. 7.8 Merger of Prior Agreements and Understandings. This Agreement and all documents incorporated herein contain the entire understanding among the parties hereto relating to the transactions contemplated herein and all prior or contemporaneous agreements, understandings, representations and statements, oral or written are merged herein and shall be of no further force or effect. 7.9 Representations and Warranties of the Developer and ofthe Participant. (a) The Developer hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: (I) The Developer is duly organized and validly existing. The Developer has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Developer hereby represent and warrant that such persons have the power, right and authority to bind the Developer. (2) The Developer has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. (3) This Agreement is, and all agreements, instruments and documents to be executed by the Developer pursuant to this Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Developer and enforceable in accordance with their respective terms. (4) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Developer is a party or by which the Developer may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Developer or to the Site. All representations and warranties contained in this Section 7.9(a) are true and correct on the date hereof and on the Closing Date and the Developer's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Close of Escrow. .15 48 (b) The Participant hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Agency has been made in material reliance by the Agency on such covenants, representations and warranties: (I) The Participant is duly organized and validly existing. The Participant has the legal right, power and authority to enter into this Agreement and the instruments and documents referenced herein and to consummate the transactions contemplated hereby. The persons executing this Agreement and the instruments referenced herein on behalf of the Participant hereby represent and warrant that such persons have the power, right and authority to bind the Participant. (2) The Participant has taken all requisite action and obtained all requisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required. (3) This Agreement is, and all agreements, instruments and documents to be executed by the Participant pursuant to this Agreement shall be, duly executed by and are or shall be valid and legally binding upon the Participant and enforceable in accordance with their respective terms. (4) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby shall result in a breach of or constitute a default under any other agreement, document, instrument or other obligation to which the Participant is a party or by which the Participant may be bound, or under law, statute, ordinance, rule, governmental regulation or any writ, injunction, order or decree of any court or governmental body applicable to the Participant or to the Site. All representations and warranties contained in this Section 7.9(b) are true and correct on the date hereof and on the Closing Date and the Participant's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall survive the execution and delivery of this Agreement and the Close of Escrow. 7.10 Representations and Warranties of the Agency. The Agency hereby makes the following representations, covenants and warranties and acknowledges that the execution of this Agreement by the Developer and the Participant has been made and the acquisition by the Developer and the Participant of the Site will have been made in material reliance by the Developer and the Participant on such covenants, representations and warranties: (I) Each and every undertaking and obligation of the Agency under this Agreement shall be performed by the Agency timely when due; and that all representations and warranties of the Agency under this Agreement and its exhibits shall be true in all material respects at the Closing as though they were made at the time of Closing. .15 49 (2) The Agency is a community redevelopment agency, duly formed, existing and operating under the laws of California. The Agency has the legal power, right and authority to enter into this Agreement and to execute the instruments and documents referenced herein, and to consummate the transactions contemplated hereby. (3) The Agency has taken all requisite action and obtained all reqUisite consents in connection with entering into this Agreement and the instruments and documents referenced herein and the consummation of the transactions contemplated hereby, and no consent of any other party is required that has not otherwise been obtained. (4) The persons executing any instruments for or on behalf of the Agency have been authorized to act on behalf of the Agency and that the Agreement is valid and enforceable against the Agency in accordance with its terms and each instrument to be executed by the Agency pursuant hereto or in connection therewith will, when executed, be valid and enforceable against the Agency in accordance with its terms. No approval, consent, order or authorization of, or designation or declaration of any other person, is required in connection with the valid execution and delivery of and compliance with this Agreement by the Agency. (5) At the Closing, the Agency will transfer the Agency Lots to effectively vest in the Developer and the Participant, good and marketable fee simple title to the Agency Lots, that the Developer and the Participant will acquire the Agency Lots free and clear of all liens, encumbrances, claims, rights, demands, easements, leases or other possessory interests, agreements, CC&Rs of any kind or character (including, without limiting the generality of the foregoing, liens or claims for taxes, mortgages, conditional sales contracts, or other title retention agreement, deeds of trust, security agreements and pledges, and mechanics lien) except for the matters covered in Section 3.6 as the Permitted Exceptions. (6) There are no pending or, to the best of the Agency's knowledge, threatened claims, actions, allegations or lawsuits of any kind, whether for personal injury, property damage, property taxes or otherwise, that could materially and adversely affect the value or use of the Agency Lots or prohibit the sale thereof to the Developer and the Participant, nor to the best of the Agency's knowledge, is there any governmental investigation of any type or nature pending or threatened against or relating to the Agency Lots or the transactions contemplated hereby. (7) Between the date of this Agreement and the Close of Escrow, the Agency will continue to manage, operate and maintain the Agency Lots in the same manner as existed prior to the execution of this Agreement. (8) There are no contracts or agreements to which the Agency is a party relating to the operation, maintenance, service, repair, development, improvement or ownership of the Agency Lots which will survive the Close of Escrow except as may be set forth in the Agency Grant Deed. .15 50 (9) The Agency Lots are located within a designated earthquake fault zone pursuant to California Public Resources Code Section 2621.9 and a designated area that is particularly susceptible to ground shaking, liquefaction, landslides or other ground failure during an earthquake pursuant to California Public Resources Code Section 2694. If the Agency becomes aware of any act or circumstance which would change or render incorrect, in whole or in part, any representation or warranty made by the Agency under this Agreement, whether as of the date given or any time thereafter through the Closing Date and whether or not such representation or warranty was based upon the Agency's knowledge and/or belief as of a certain date, the Agency will give immediate written notice of such changed fact or circumstance to the Developer and the Participant, but such notice shall not release the Agency of its liabilities or obligations with respect thereto. All representations and warranties contained in this Section 7.10 are true and correct on the date hereof and as of the Closing Date, and the Agency's liability for misrepresentation or breach of warranty, representation or covenant, wherever contained in this Agreement, shall terminate on the first calendar day following the Close of Escrow. 7.11 Binding Effect of Agreement. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their legal representatives, successors, and assigns. This Agreement shall likewise be binding upon and obligate the Site and the Successors-In-Interest, owner or owners thereof, and all of the tenants, lessees, subIessees and occupants of such Site. 7.12 Assurances to Act in Good Faith. The Agency, the Developer and the Participant agree to execute all documents and instruments and to take all action and shall use their best efforts to accomplish the purposes of this Agreement. The Agency, the Developer and the Participant shall each diligently and in good faith pursue the satisfaction of any conditions or contingencies subject to their approval. 7.13 Business Registration Certificate. The Developer and the Participant each separately warrant that they possess, or shall obtain immediately after the execution and delivery of this Agreement, and both the Developer and the Participant shall maintain during the period of time during the term of this Agreement, a business registration certificate pursuant to Title 5 of the City of San Bernardino Municipal Code, together with any and all other licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to be maintained by the Developer and the Participant to conduct its business activities within the City. .15 51 7.14 Release of Developer and/or the Participant from Liability. Notwithstanding any provision herein to the contrary, the Developer and the Participant shall be relieved of any and all liability for the obligations of the Developer and/or the Participant, as applicable, hereunder with regard to the Project at such time as the Certificate of Completion for the Project has been issued by the Agency hereunder with respect thereto, other than as to any covenants and obligations required by the Agency Grant Deed by which the Agency Lots shall be conveyed to the Developer and to the Participant hereunder. 7.15 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such a marmer as to be effective and valid under applicable law. If, however, any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. .IS 52 IN WITNESS WHEREOF the Agency, the Developer and the Participant have executed this Agreement as of the date first written above. AGENCY Redevelopment Agency of the City of San Bernardino, a public body corporate and politic Date: By: Maggie Pacheco, Executive Director Approved as to Form and Legal Content: .~ By: V~ Agen~C unsel DEVELOPER Arroyo Valley Community Economic Development Corporation, a California non-profit benefit corporation Date: By: Its: Name: By: Its: Name: PARTICIPANT Inland Empire Concerned African American Churches, a California non-profit corporation Date: By: Its: Name: By: Its: Name: .15 53 EXHIBIT "A" LEGAL DESCRIPTION OF THE AGENCY LOTS APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALiFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALiFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALiFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALiFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALiFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19, 19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 54 EXHIBIT "B" SCHEDULE OF PERFORMANCE Execution of Agreement Agreement shall be authorized, executed and delivered by the Developer and the Participant to the Agency. Opening of Escrow The Agency, the Developer and the Participant shall open the Escrow with the Title Company Evidencing of Financing The Developer shall provide the Agency with financing for the Project unless extended pursuant to the Agreement. Design The Developer shall prepare all plans and specifications and obtain all required permits. Evidence of Insurance The Developer shall furnish to the Agency, certificate of insurance as set forth in Section 4.1 of the Agreement. Closing of Escrow The Agency, the Developer and the Participant shall Close Escrow Commencement of Construction The Developer shall commence construction of the improvements of the Site pursuant to Section 4.1. Completion of Construction All improvements on the Site as well as off- site improvements shall be completed on or before June 16,2008. On or before November 20, 2006. On or beforeJanuary 15, 2007. On or before January 15, 2007. No later than July 15,2007. Prior to the Developer and the Participant or their agents commencing construction at the Site or having access to the Agency Lots. On or before October 16, 2007. Upon the Close of Escrow which Close of Escrow shall occur no later than October 16, 2007. No later than June 16,2008. It is understood that this Schedule of Performance is subject to all of the terms and conditions of the text of the Agreement. The summary of the items in this Schedule of Performance is not intended to supersede or modify the more complete description in the text; in the event of any .15 55 conflict of or inconsistency between this Schedule of Performance and the text of the Agreement, the text of the Agreement shaH govern. The time periods set forth in this Schedule of Performance may be altered or amended only by written agreement signed by the Developer and the Participant with the Executive Director of the Agency. The Executive Director of the Agency shall have the authority to approve extensions of time without action of the Community Development Commission of the Agency not to exceed a cumulative total of one hundred eighty (180) calendar days. .15 56 EXHIBIT "C" FORM OF AGENCY GRANT DEED RECORDING REQUESTED BY ) Redevelopment Agency ) of the City of San Bernardino ) ) AND WHEN RECORDED MAIL TO: ) Arroyo Valley Community Economic ) Development Corporation ) P.O. Box 1599 ) San Bernardino, California 92402 ) Attn.: Antonio Dupre Sr., President ) (Space above line reserved for use by Recorder) REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO GRANT DEED OF A PUBLIC AGENCY AND AFFORDABLE SINGLE FAMILY HOUSING DEVELOPMENT, USE AND OCCUPANCY CONDITIONS, COVENANTS AND RESTRICTIONS THIS GRANT DEED OF A PUBLIC AGENCY AND COMMUNITY REDEVELOPMENT AFFORDABLE SINGLE-FAMILY HOUSING DEVELOPMENT, USE AND OCCUPANCY CONDITIONS, COVENANTS AND RESTRICTIONS (the "Agency Grant Deed") hereby grants from the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency") that certain real property consisting of land located in the City of San Bernardino, County of San Bernardino, California (Assessor's Parcel Number 0144-131-21, Assessor's Parcel Number 0144-131-36, Assessor's Parcel Number 0144-123-03 and Assessor's Parcel Number 0144-123-46) (the "Property") (the legal description of which is attached hereto and incorporated herein by this reference as Exhibit "A") to Arroyo Valley Community Economic Development Corporation ("Arroyo"), a California non-profit benefit corporation, and to Inland Empire Concerned African American Churches (the "Participant"), a California non- profit corporation, as joint owners (Arroyo and the Participant shall collectively be referred to as the "Developer") subject to the community redevelopment affordable single-family housing development, use and occupancy conditions, covenants and restrictions contained in PART B hereof. The Agency is the grantor in this Agency Grant Deed and the Developer is the grantee. .15 57 For valuable consideration, the receipt of which is hereby acknowledged, the Agency hereby grants to the Developer, subject to the community redevelopment affordable single-family housing conditions, covenants and restrictions of this Agency Grant Deed, all of the rights, title and interests of the Agency in the Property, as more particularly described below: (-- The Property --) See Exhibit "A" attached hereto, on file in the Official Records of the Office of the Recorder of San Bernardino County. PARTB The grant of the Property by the Agency to the Developer is expressly subject to the satisfaction of the following and the community redevelopment affordable single-family housing conditions, covenants and restrictions as arise under that certain agreement entitled "2006 HOME Funds Development Agreement - Four Agency Lots", dated as of November 20, 2006 (the "Agreement"), by and between the Agency and the Developer: I. The Property shall be reserved for use, development and occupancy for Low- Income Single-Family unit residential purposes, as the term "Low-Income Household" is defined below; and 2. During the fust forty-five (45) years commencing on the date of recordation of this Agency Grant Deed for the Single-Family Unit shall be restricted, sold to and occupied by Lower Income Households at "affordable cost" as defined below; and 3. For the purposes of subparagraphs I and 2 above, the following definitions of certain terms shall apply: "lower income households" means and refers to persons and families whose income does not exceed the qualifying limits for lower income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937 at 80 percent of the area median income, adjusted for family size and revised annually. PART C Subject to the covenant of the Developer as provided in PART B, the Developer shall refrain from restricting the sale of the Property on the basis of race, color, creed, religion, sex, marital status, age, physical or mental disability, ancestry, or national origin of any person. All such deeds shall contain or be subject to, substantially, the following nondiscrimination or nonsegregation clauses: Deeds: In deeds the following language shall appear: Except as specifically provided in the Agency Regulatory Agreement with respect to the sale of the unit to a Low-Income Household, as such term is defined therein and subject to the .IS 58 covenant in the Agency Grant Deed improved On the Property by the Redevelopment Agency of the City of San Bernardino which reserves the Property for use, improvement and sold to a Low-Income Household. The Developer herein covenants by and for itself, its heirs, executors, administrators, and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, age, physical or mental disability, ancestry, or national origin in the sale, lease, rental, sublease, transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the Developer itself, or any persons claiming under or through it, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number and use in the land herein conveyed. The foregoing covenants shall run with the land. The foregoing covenants shall remain in effect in perpetuity. PART D No violation or breach of the covenants, conditions, restrictions, provISIons or limitations contained in PART B, PART C or PART F of this Agency Grant Deed shall defeat or render invalid or in any way impair the lien or charge of any mortgage, deed of trust or other financing or security instrument permitted by and approved by the Agency pursuant to the Agreement; provided, however, that any successor of the Developer to the Property shall be bound by such remaining covenants, conditions, restrictions, limitations and provisions, whether such successor's title was acquired by foreclosure, deed in lieu of foreclosure, trustee's sale or otherwise. PARTE The terms and provisions of PART B, PART C and PART F of this Agency Grant Deed shall be subordinate to the terms and provisions of the construction/permanent financing and any other documents entered into by the Developer in connection with the development of the Property. Notwithstanding anything in this Agency Grant Deed to the contrary, no amendment to PART B through PART F, inclusive of this Agency Grant Deed by the Developer, or its successors or assigns and the Agency Grant Deed shall be effective at all time. PARTF The provisions of this Agency Grant Deed are expressly declared by the Agency to promote and increase, improvement, and preservation of the community's supply of low-income housing. Upon the delivery of this Agency Grant Deed to the Developer, the community redevelopment affordable single-family housing conditions, covenants, and restrictions as contained herein shall be covenants and restrictions which affect the Property and shall run with the land and shall be enforceable by either the Agency or by the City of San Bernardino, a municipal corporation, as community redevelopment affordable single-family housing conditions, covenants, and restrictions against the Developer and/or the Participant and each Successor-In-Interest or .15 59 assignee of the Developer and/or the Participant in the Property. No person other than the City of San Bernardino or the Agency shall be deemed to be authorized to enforce any provision of this Agency Grant Deed as a covenant or restriction which runs with the land and affects the Property. TillS AGENCY GRANT DEED is executed as of the date indicated below next to the authorized signature of the Executive Director of the Agency. AGENCY Redevelopment Agency of the City of San Bernardino Dated: By: Maggie Pacheco, Executive Director Approved as to Form and Legal Content: Agency Counsel [NOTARY JURAT ATTACHED] .IS 60 ACCEPTANCE OF AGENCY GRANT DEED AND COMMUNITY REDEVELOPMENT AFFORDABLE SINGLE-FAMILY HOUSING DEVELOPMENT, USE AND OCCUPANCY CONDITIONS, COVENANTS AND RESTRICTIONS BY THE DEVELOPER AND/OR THE P ARTICIP ANT The undersigned officers of Arroyo Valley Community Economic Development Corporation ("Arroyo"), a California non-profit benefit corporation, and the officers of Inland Empire Concerned African American Churches (the "Participant"), a California non-profit corporation (Arroyo and the Participant shalI colIectively be referred to as the "Developer"), hereby accept the delivery of the instrument identified above as the "Agency Grant Deed and Community Redevelopment Affordable Single-Family Housing Development, Use and Occupancy Conditions, Covenants, and Restrictions" (the "Agency Grant Deed"), and the transfer of the Property from the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic, subject to the conditions, covenants, and restrictions contained in the Agency Grant Deed. The Developer hereby acknowledges and agrees that it accepts the Property in an "AS IS", "WHERE IS" and "SUBJECT TO ALL FAULTS" condition and that the Developer is solely responsible for causing the Property to be improved as set forth in the Agreement by and between the Agency and the Developer. The Developer hereby further accepts and agrees to each of the community redevelopment affordable single-family residential housing use, improvement and occupancy conditions, covenants and restrictions contained in the Agency Grant Deed which touch and concern the Property and the community redevelopment covenants which run with the land, subject to the provisions of PART E of the Agency Grant Deed. THE DEVELOPER Arroyo Valley Community Economic Development Corporation, a California non-profit benefit corporation Date: By: Its: Name: By: Its: Name: .15 62 Inland Empire Concerned African American Churches, a California non-profit corporation Date: By: Its: Name: By: Its: Name: [NOTARY JURAT ATTACHED] .15 63 EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19, 19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 64 I EXHIBIT "0" GENERAL FORM OF HOMEBUYER ASSISTANCE PROGRAM (HAP) HOME COVENANT (Redevelopment Agency of the City of San Bernardino) THIS DOCUMENT IS PRESENTED IN GENERAL FORM. The final form of this HOME Covenant shall be completed and executed by the "Qualified Homebuyer" and the Agency at the time of close of the "New Home Escrow," as each of these items are defined in this HOME Covenant. 4839-9390-0544.1 P:lAgendaslAgenda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino Attn.: Executive Director 201 North "E" Street, Suite 301 San Bernardino, CA 92401 (Space Above Line Reserved For Use By Recorder) Recording Fee Exempt Pursuant to Government Code Section 6103 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO HOME PROGRAM AFFORDABILlTY COVENANTS AND RESTRICTIONS AGREEMENT FOR THE AGENCY HOMEBUYER ASSISTANCE PROGRAM (AGENCY HOME PROGRAM) THESE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO COMMUNITY REDEVELOPMENT HOME COVENANTS AND RESTRICTIONS (the "HOME Covenant") is made and entered into as of by and between the REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (the "Agency"), a public body, corporate and politic, and (the "Qualified Homebuyer"), and this HOME Covenant relates to the following facts set forth in Recitals: --- RECITALS --- A. The Qualified Homebuyer proposes to acquire a single-family residence (the "New Home"), located within the City of San Bernardino (the "City"), from , to be owned and occupied by the Qualified Homebuyer as their principal residence. The legal description of the New Home is attached hereto as Exhibit "A" and incorporated herein by this reference. B. The Agency has entered into that certain Qualified Homebuyer Mortgage Loan Assistance Agreement, dated , (the "Agency Loan Agreement") with the Qualified Homebuyer, pursuant to which the Agency has agreed to provide the Qualified Homebuyer with certain purchase money mortgage financing for the acquisition of the New Home; subject to certain conditions, inclUding the terms and conditions of this HOME Covenant. The Agency Loan Agreement indicates the Qualified Homebuyer is subject to the affordable housing program requirements of the Agency's "HOME Program", as indicated in Recital Paragraph C of the Agency Loan Agreement; and I C. The terms of the Agency Loan Agreement mandate that the acquisition, use and occupancy of the New Home shall be restricted in certain respects for the term as provided herein (the "Qualified Residence Period") in order to ensure that the New Home will be used and occupied in accordance with the Agency Loan Agreement and the affordable single family residential dwelling unit development goals and objectives of the Agency. NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND UNDERTAKINGS SET FORTH HEREIN, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE QUALI- FIED HOMEBUYER AND THE AGENCY DO HEREBY COVENANT AND AGREE FOR THEMSELVES, THEIR SUCCESSORS AND ASSIGNS AS FOLLOWS: Section 1. Definitions of certain Terms. As used in this HOME Covenant, the following words and terms shall have the meaning as provided in the Recitals or in this Section 1 unless the specific context of usage of a particular word or term may otherwise require: Adjusted Family Income. The words "Adjusted Family Income" mean the anticipated total annual income (adjusted for family size) of each individual or family residing or treated as residing in the New Home as calculated in accordance with Treasury Regulation 1.167 (k) - 3(b)(3) under the code, as adjusted, based upon family size in accordance in the household income adjustment factors adjusted and amended from time to time pursuant to Section 8 of the U.S. Housing Act of 1937, as amended as this term is defined in 24 CFR Part 92.203(b)(3) for the total annual income of each individual or family residing or treated as residing in the New Home. HOME Covenant. The words "HOME Covenant" means this HOME Program Affordability Covenants and Restrictions Agreement by and between the Qualified Homebuyer and the Agency pertaining to the New Home. Code. The word "Code" means the Internal Revenue Code of 1986, as amended, and any regulation, rulings or procedures with respect thereto. Delivery Date. The words "Delivery Date" mean the date of delivery of title and possession of the New Home to the Qualified Homebuyer at the close of the New Home Escrow. Low-Income Family. The words "Low-Income Family" means persons and families whose annual income do not exceed eighty percent (80%) of the median income for the area, as determined by the united States Secretary for the Department of Housing and Urban Development with adjustments for smaller and larger families, as set forth at 24 Code of Federal Regulations (CFR) Part 92.2. 4839-9390-0544.1 2 P:\Agendas\Agenda Attachments\Agrmts.Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/18/2006 New Home. The words "New Home" mean and refer to the affordable single- family residential dwelling unit (including the land and landscape improvements thereon) as acquired by the Qualified Homebuyer upon the close of the New Home Escrow. A legal description of the New Home is attached to this HOME Covenant as Exhibit "A." New Home Escrow. The words "New Home Escrow" mean and refer to the real estate conveyance transaction or escrow by and between the Qualified Homebuyer and the seller of the New Home (or later, by and between the Qualified Homebuyer and the Successor-In-Interest). The transfer of the New Home to the Qualified Homebuyer (or later, by and between the Qualified Homebuyer and the Successor-In-Interest) shall be accomplished upon the close of the New Home Escrow. Notice of Agency Concurrence. The words "Notice of Agency Concurrence" mean and refer to the acknowledgment in recordable form in which the Agency confirms that the proposed Successor-in-Interest of the Qualified Homebuyer satisfies all of the Adjusted Family Income and other requirements of this HOME Covenant for occupancy of the New Home by the Successor-in-Interest at any time during the Qualified Residence Period. Qualified Homebuyer. The words "Qualified Homebuyer" mean the purchaser of the New Home (e.g.: all persons identified as having property ownership interest vested in the New Home at the close of the New Home Escrow). At the close of the New Home Escrow, the Qualified Homebuyer shall: (i) have an annual Adjusted Family Income which does not exceed the household income qualification limits of a Low-Income Family and (Ii) shall be a first-time homebuyer, as provided at 24 CFR Part 92.254 (a)(3). Qualified Residence Period. The words "Qualified Residence Period" mean the period of time beginning on the Delivery Date and ending on the date which is forty-five (45) years after the Delivery Date. Successor-in-Interest. The words "Successor-In-Interest" means and refers to the Low-Income Family which may acquire the New Home from the Qualified Homebuyer at any time during the Qualified Residence Period by purchase, assignment transfer or otherwise. The Successor-In-Interest shall be a Low- Income Family and shall otherwise satisfy the requirements of 24 CFR Part 92.254(a). Upon acquisition of the new Home, the Successor-In-Interest shall be bound by each of the covenants, conditions and restrictions of this HOME Covenant. The titles and headings of the sections of this HOME Covenant have been inserted for convenience of reference only and are not to be considered a part hereof and shall not in any way modify or restrict the meaning of any of the terms or provisions hereof. 4639-9390-0544.1 3 P:\Agendas\A.genda Attachments\AgrmtS-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 Section 2. Acknowledqments and Representations of the Qualified Homebuver. The Qualified Homebuyer hereby acknowledges and represents that as of the Delivery Date: (a) the total household income for the Qualified Homebuyer does not exceed the maximum amount permitted as Adjusted Family Income for a Low- Income Family adjusted for family size; (b) the Qualified Homebuyer intends to promptly occupy the New Home after the Delivery Date as the principal place of residence for the term of at least forty-five (45) years following the Delivery Date and the Qualified Homebuyer has not entered into any arrangement and has no present intention to rent, sell, transfer or assign the New Home to any third party during the Qualified Residence Period so as to frustrate the purpose of this HOME Covenant; (c) the Qualified Homebuyer has no present intention to lease or rent any room or sublet or rent a portion of the New Home to any relative of the Qualified Homebuyer or to any third person at any time during the Qualified Residence Period; and (d) the Qualified Homebuyer agrees to provide the Agency with the following items of information for inspection by the Agency promptly upon written request of the Agency: (i) State and federal income tax returns filed by all persons who reside in the New Home for the calendar year preceding the close of the New Home Escrow for inspection of such State and federal income tax returns; and (ii) current wage, income and salary statements for all person residing in the New Home at the close of the New Home Escrow; (e) the Qualified Homebuyer is aware and has been informed prior t6 the Delivery Date that this HOME Covenant imposes certain restrictions on the use and occupancy of the New Home during the term of this HOME Covenant and that this HOME Covenant imposes certain restrictions on the resale of the New Home during the Qualified Residence Period. The Qualified Homebuyer acknowledges and understands that the resale restrictions shall be applicable to the New Home and to any resale of the New Home from Delivery Date to the end of the Qualified Residence Period which is 20_. Dated: Initials of Qualified Homebuyer 4839-9390-0544.1 4 P:\Agendas\Agenda AttachmentslAgrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/16/2006 Section 3. Acknowledament of Subordination of the Provisions of this HOME Covenant to the Mortaaae Securitv Interest of the First Mortaaae Lender. Concurrently, upon the execution and recordation of this HOME Covenant, the Qualified Homebuyer shall obtain certain purchase money mortgage financing for the acquisition of the New Home from (the "First Mortgage Lender"). As of the Delivery Date, the Qualified Homebuyer has provided the Agency with a true and correct copy of the loan agreement by and between the First Mortgage Lender and the Qualified Homebuyer. As a condition to providing its mortgage loan to the Qualified Homebuyer, the First Mortgage Lender requires the Agency to agree that the provisions of Section 4 and Section 7 of this HOME Covenant shall be junior and subordinate to the security interest of the First Mortgage Lender in the New Home of even date herewith. The Agency hereby acknowledges and agrees that the provisions of Section 4 and Section 7 of this HOME Covenant are subordinate and junior to the security interest of the First Mortgage Lender in the New Home of even date herewith. No breach or default by the Qualified Homebuyer of any provision of Section 4 and Section 7 of this HOME Covenant, nor the exercise by the Agency of any remedy it may have against the Qualified Homebuyer in the event of such a breach or default shall affect or render invalid the lien of the First Mortgage Lender in the New Home. Thus, the First Mortgage Lender and any good faith purchaser for value from the First Mortgage Lender, its successors and assigns, including, without limitation, the United States Secretary of Housing and Urban Development, if such mortgage has been assigned to the Secretary of Housing and Urban Development, receiving title to the New Home through a trustee's sale, judicial foreclosure sale, deed in lieu of foreclosure and any conveyance or transfer thereafter, shall receive title to the New Home free and clear of the provisions of Section 4 and Section 7 of this HOME Covenant. Section 4. Covenant of the Qualified Homebuver to maintain Affordabilitv of the New Home durina the Qualified Residence Period and Covenant Relatina to Sale or Transfer of the New Home durina the Qualified Residence Period to a Successor-In-Interest. (a) The Qualified Homebuyer, for itself, its heirs, successors and assigns, hereby covenants and agrees that during the term of the Qualified Residence Period the New Home shall be used and, occupied by the Qualified Homebuyer as its principal residence, and that the New Home shall be reserved for sale, use and occupancy by the Qualified Homebuyer and/or for another Lower-Income Household as a Successor- In-Interest. The Qualified Homebuyer, for itself, its heirs, successors and assigns, further covenants and agrees that, during the Qualified Residence Period, the Agency shall have the right and duty as provided in this Section 4 to verify that each proposed Successor-In-Interest of the Qualified Homebuyer in the New Home satisfies the income requirements (based upon the Adjusted Family Income of a Low-Income Family) and that the completion of any resale or transfer of the New Home to a Successor-In- Interest shall be subject to the recordation of the "Notice of Agency Concurrence" as provided in Section 4{d). 4839-9390-0544.1 5 P:\Agendas\Agenda Attachments\Agrmts.Amend 2006\112006 Arroyo Groop Home Funds Development Agreement4.doc 10/16/2006 (b) The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that during the term of the Qualified Residence Period the Qualified Homebuyer shall not sell, transfer or otherwise dispose of the New Home (or any interest therein) at a sale or transfer price which exceeds ninety-five percent (95%) of the median purchase price for the area as provided in 24 CFR Part 92.25(a)(2)(iii), to a Successor-In-Interest without first obtaining the written concurrence of the Agency as provided herein. At least sixty (60) days prior to the date on which the Qualified Homebuyer proposes to transfer title in the New Home to a Successor-In-Interest, the Qualified Homebuyer shall send a written notice to the Agency as provided in Section 17 of the intention of the Qualified Homebuyer to sell the New Home to a Successor-In- Interest which includes the following true and correct information: (i) name of the proposed Successor-in-Interest (including the identity of all persons in the household of the Successor-in-Interest, proposing to reside in the New Home) together with a completed HOME Program application executed by the proposed Successor-in-Interest; (ii) copies of State and federal income tax returns for the Successor-In- Interest for the calendar year preceding the year in which the notice of intention to sell the New Home is given to the Agency; (iii) resale price of the New Home payable by the Successor-In-Interest, including the terms of all purchase money mortgage financing to be assumed, provided or obtained by the Successor-In-Interest, escrow costs and charges, reaitor broker fees and all other resale costs or charges payable by either the Qualified Homebuyer or the Successor- In-Interest; (iv) name address, and telephone number of the escrow company which shall coordinate the transfer of the New Home from the Qualified Homebuyer to the Successor-In-Interest; (v) appropriate mortgage credit reference for the Successor-In-Interest with a written authorization signed by the Successor-In-Interest authorizing the Agency to contact each such reference; and (vi) such other relevant information as the Agency may reasonably request, as provided in Section 4(c). (c) Within thirty (30) days following receipt of the notice of intention described in Section 4(b), the Agency shall provide the Qualified Homebuyer with either a preliminary confirmation of approval or a preliminary rejection in writing of the income and household occupancy qualifications of the Successor-In-Interest. The Agency shall not unreasonably withhold approval of any proposed sale of the New Home to a Successor-In-Interest who satisfies the Adjusted Family Income requirements of a Low- Income Family for occupancy of the New Home and for whom the other information as described in Section 4(b) has been provided to the Agency. In the event that the Agency may request additional information relating to the confirmation of the matters described in Section 4(b), the Qualified Homebuyer shall provide such information to the Agency as promptly as feasible. 4839-9390-0544.1 6 P:\Agendas\Agenda Attachments\Agrmts--Amend 2006\112006 Asroyo Group Home Funds Development Agreement4.doc 10/16/2006 (d) Upon its final confirmation of approval of the Adjusted Family Income eligibility of the Successor-In-Interest to acquire the New Home, the Agency shall deliver a written acknowledgment and approval of the resale of the New Home to the Successor-In-Interest in recordable form to the escrow holder referenced in Section 4(b)(iv) above, and thereafter the Successor-In-Interest may acquire the New Home subject to the satisfaction of the following conditions: (i) the recordation of the Notice of Agency Concurrence executed by the Successor-In-Interest and the Agency at the close of the resale escrow; (ii) the escrow holder shall have provided the Agency with a copy of the customary form of the final escrow closing statement of the Qualified Homebuyer and the final escrow closing statement for the Successor- In-Interest; and (iii) the other conditions of the resale escrow as established by the Qualified Homebuyer and Successor-In-Interest shall have been satisfied. (e) The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that during the Qualified Residence Period the New Home shall not be leased, subleased, or rented to any third person, except for a temporary period (not to exceed twelve (12) months) in the event of an emergency or other unforeseen circumstance as may be expressly approved in writing by the Agency subject to compliance during the temporary rental period with the reasonable temporary rental occupancy conditions required by the Agency. The Qualified Homebuyer shall submit a written request to the Agency prior to the commencement of the temporary occupancy, as practicable, but in any event within not more than sixty (60) days following the commencement of a temporary rental occupancy of the New Home by a third party, which notice shall set forth the grounds on which the Qualified Homebuyer believes an emergency or other unforeseen circumstance has occurred and that a temporary rental occupancy is necessary. Section 5. Maintenance Condition of the New Home. The Qualified Homebuyer, for itself, its successors and assigns, hereby covenants and agrees that: (a) The exterior areas of the New Home which are subject to public view (e.g.: all improvements, paving, walkways, landscaping, and ornamentation) shall be maintained in good repair and a neat, clean and orderly condition, ordinary wear and tear excepted. In the event that at any time during the term of the Qualified Residence Period, there is an occurrence of an adverse condition on any area of the New Home which is subject to public view in contravention of the general maintenance standard described above, (a "Maintenance Deficiency") then the Agency shall notify the Qualified Homebuyer in writing of the Maintenance Deficiency and give the Qualified Homebuyer thirty (30) days from the date of such notice to cure the Maintenance Deficiency as identified in the notice. The words "Maintenance Deficiency" include, without limitation, the following inadequate or non-confirming property maintenance conditions and/or breaches of single family dwelling residential property use restrictions: 483~9390-0544.1 7 P:\Agendas\Agenda Attachments\Agrmts-Amend 2006\112006 hroyo Group Home Funds Development Agreement4.doc 10/1612006 failure to properly maintain the windows, structural elements, and painted exterior surface areas of the dwelling unit in a clean and presentable manner; failure to keep the front and side yard areas of the property free of accumulated debris, appliances, inoperable motor vehicles or motor vehicle parts, or free of storage of lumber, building materials or equipment not regularly in use on the property; failure to regularly mow lawn areas or permit grasses planted in lawn areas to exceed nine (9") inches in height, or failure to otherwise maintain the landscaping in a reasonable condition free of weeds and debris; parking of any commercial motor vehicle in excess of seven thousand (7,000) pounds gross weight anywhere on the property, or the parking of motor vehicles, boats, camper shells, trailers, recreational vehicles and the like in any side yard or on any other parts of the property which are not covered by a paved and impermeable surface; and the use of the garage area of the dwelling unit for purposes other than the parking of motor vehicles and the storage of personal possessions and mechanical equipment of persons residing in the New Home. In the event the Qualified Homebuyer fails to cure or commence to cure the Maintenance Deficiency within the time allowed, the Agency may thereafter conduct a public hearing following transmittal of written notice thereof to the Qualified Homebuyer ten (10) days prior to the scheduled date of such public hearing in order to verify whether a Maintenance Deficiency exists and whether the Qualified Homebuyer has failed to comply with the provision of this Section 5(a). If, upon the conclusion of a public hearing, the Agency makes a finding that a Maintenance Deficiency exists and that there appears to be non-compliance with the general maintenance standard, as described above, thereafter the Agency shall have the right to enter the New Home (exterior areas only) and perform all acts necessary to cure the Maintenance Deficiency, or to take other action at law or equity the Agency may then have to accomplish the abatement of the Maintenance Deficiency. Any sum expended by the Agency for the abatement of a Maintenance Deficiency as authorized by this Section 5(a) shall become a lien on the New Home. If the amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency to the Qualified Homebuyer, the Agency shall have the right to enforce the lien in the manner as provided in Section 5(c). (b) Graffiti which is visible from any public right-of-way which is adjacent or contiguous to the New Home shall be removed by the Qualified Homebuyer from any exterior surface of a structure or improvement on the New Home by either painting over the evidence of such vandalism with a paint which has been color-matched to the surface on which the paint is applied, or graffiti may be removed with solvents, detergents or water as appropriate. In the event that graffiti is placed on the New Home (exterior areas only) and such graffiti is visible from an adjacent or contiguous public right-of-way and thereafter such graffiti is not removed within seventy-two (72) hours 4839-9390-0544.1 8 P:\Agendas\Agenda Attachments\A(ltmts-Amend 2006\112006 hroyo Group Home Funds Development Agreement4.doc 10/16/2006 following the time of its application; then in such event and without notice to the Qualified Homebuyer, the Agency shall have the right to enter the New Home and remove the graffiti. Notwithstanding any provision of Section 5(a) to the contrary, any sum expended by the Agency for the removal of graffiti from the New Home as authorized by this Section 5(b) shall become a lien on the New Home. If the amount of the lien is not paid within thirty (30) days after written demand for payment by the Agency to the Qualified Homebuyer, the Agency shall have the right to enforce its lien in the manner as provided in Section 5(c). (c) The parties hereto further mutually understand and agree that the rights conferred upon the Agency under this Section 5 expressly include the power to establish and enforce a lien or other encumbrance against the New Home in the manner provided under Civil Code Sections 2924, 2924b and 2924c in the amount as reasonably necessary to restore the New Home to the maintenance standard required under Section 5(a) or Section 5(b), including attorneys fees and costs of the Agency associated with the abatement of the Maintenance Deficiency or removal of graffiti and the collection of the costs of the Agency in connection with such action. In any legal proceeding for enforcing such a lien against the New Home, the prevailing path shall be entitled to recover its attorneys' fees and costs of suit. The provisions of this Section 5, shall be a covenant runriing with the land for the Qualified Residence Period and shall be enforceable by the Agency in its discretion, cumulative with any other rights or powers granted by the Agency under applicable law. Nothing in the foregoing provisions of this Section 5 shall be deemed to preclude the Qualified Homebuyer from making any alterations, additions, or other changes to any structure or improvement or landscaping on the New Home, provided that such changes comply with the zoning and development regulations of the City and other applicable law. Section 6. Protection of AQencv Investment of Monevs derived from the HOME Fund in the New Home - AQencv Investment Reimbursement. (a) For the purpose of this Section 6, the following terms shall have the meaning as provided below: "Agency Investment Reimbursement" means and refers to a portion of the Resale Profit, if any, which shall be payable to the Agency upon the sale or transfer of the New Home during the Qualified Residence Period to a person or household which does not qualify as a Successor-In-Interest to the Qualified Homebuyer. The formula for calculation the amount of the Agency Investment Reimbursement which may hereafter be payable to the Agency during the Qualified Residence Period is set forth in this Section 6. In the event that the application of the formula for determining the Agency Investment Reimbursement in any particular year during the term of the Qualified Residence Period may produce a sum which is Zero Dollars ($0) or less than Zero Dollars ($0), then in such event no Agency Investment Reimbursement amount shall be payable by the Qualified Homebuyer to the Agency. "Costs of Eligible Capital Improvements" means and refers to any substantial and permanent structural improvements to the New Home which are made to the New Home completed and paid for by the Qualified Homebuyer after the Delivery Date which 4839-9390-0544.1 9 P:\Agendas\Agenda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/1612006 satisfy all of the following conditions: (i) the improvements are made or installed and conform with all applicable provisions of the San Bernardino Municipal Code and for which the City has issued building permits; (ii) the particular improvement is recognized under the Code as a capital improvement; (iii) if the total amount of Eligible Capital Improvements made by the Qualified Homebuyer exceeds the sum of Five Thousand Dollars ($5,000) in any calendar year, the Qualified Homebuyer has given the Agency prior written notice of its intention to make such capital improvements to the New Home; (iv) the particular capital improvement shall exceed the sum of Two Thousand Dollars ($2,000) in value, as installed in the New Home; and (v) the Qualified Homebuyer has provided suitably detailed written evidence to the Agency of the actual cost of the particular capital improvement to the New Home. "Purchase Money Mortgage" means the original balance on the Delivery Date of the New Home mortgage provided to the Qualified Homebuyer by the conventional mortgage lender (e.g., the First Mortgage Lender identified in Section 3, above), plus the original outstanding balance of the Agency Loan also identified in Section 3, above. "Qualified Homebuyer Equity" means the downpayment amount in cash paid by the Qualified Homebuyer for the New Home on the Delivery Date (e.g.: the equity or "basis' as defined under the Code, net of the Purchase Money Mortgage of the Qualified Homebuyer in the New Home), plus the reduction, if any, of the outstanding principal balance of the Purchase Money Mortgage secured by the New Home through the date of the resale of the New Home. "Resale Price" means the total consideration paid by the Successor-In-Interest, including real estate broker fees and commissions for the purchase of the New Home, but excluding escrow fees and mortgage financing costs payable or otherwise allocated to the Successor-In-Interest in connection with the transfer of the New Home from the Qualified Homebuyer to the Successor-In-Interest. "Resale Profit" means the balance of the following calculation: (Resale PriceHPurchase Money MortgageHQualified Homebuyer Resale Cost Adjustment Factor + Costs of Eligible Improvements )=Resale Profit. Equity + Capital A portion of the Resale Profit shall be payable to the Agency by the Qualified Homebuyer in accordance with Section 5(b). "Resale Cost Adjustment Factor" means one of the following sums determined by reference to the number of years which have elapsed between the Delivery Date and the date on which the resale and transfer of the New Home to the Successor-in-Interest occurs: 4839-9390-0544.1 10 P;\A.gendas\AQenda Attachmenls\l\grmts-Amend 2006\112006 Anayo Group Home Funds Development Agreemenl4.doc 10/16/2006 Date of Resale of New Home after the Delivery Date: From the Delivery Date to the 5th anniversary after Delivery Date From and including the 5th anniversary to the 10th anniversary after Delivery Date From and including the 10th anniversary to the end of the Qualified Residence Period Resale Cost Adjustment Factor: $2,000 $5,000 $10,000 (b) The Agency has used and applied certain moneys from the HOME Funds of the Agency to assist with the development of the New Home. In the event that the New Home may be sold, assigned, conveyed or otherwise transferred by the Qualified Homebuyer during the term of the Qualified Residence Period to a person or household whose Adjusted Family Income at the time of close of the New Home Escrow for such a person or family, exceeds the income level for a Low Income Household, a portion of the Resale Price of the New Home in excess of the sum of the Qualified Homebuyer Equity, plus the applicable Resale Cost Adjustment Factor, the Cost of Eligible Capital Improvements, after the applicable amount of the Purchase Money Mortgage has been paid to the First Mortgage Lender and the Agency (e.g.: the "Resale Profit" amount) shall be payable to the Agency as the Agency Investment Reimbursement in accordance with 24 CFR 92.2, and as provided in this Section 6. (c) In the event that, at any time during the Qualified Residence Period, the Qualified Homebuyer (or any Successor-In-Interest) may sell, assign, conveyor otherwise transfer the New Home to a person or household whose Adjusted Family Income exceeds the income level for a Low Income Household, a portion of the Resale Profit realized by the Qualified Homebuyer shall be payable to the Agency as the "Agency Investment Reimbursement" in the amounts as follows: Date of Resale of New Home After Delivery Date Portion of Resale Profit Payable to Agency from Resale of New Home From the Delivery Date to the 2110 anniversary after 90% of Resale Profit is payable to Agency as the Delivery Date Agency Investment Reimbursement From the 2~ anniversary to the 10'" anniversary 75% of Resale Profit is payable to Agency as after the Delivery Date Agency Investment Reimbursement From the 10"' anniversary to end the 20'" 50% of Resale Profit is payable to Agency as anniversary after the Delivery Date Agency Investment Reimbursement From the 20'" anniversary to the 30'" anniversary 25% of the Resale Profit is payable to the Agency as after the Delivery Date Agency Investment Reimbursement From the 30'" anniversary after the Delivery Date to 10% of the Resale Profit is payable to the Agency as the end of the Qualified Residence Period Aaencv Investment Reimbursement 4839.93~544.1 11 P:\Agendas\Agenda Attachmems\Agrmts-Amend 2006\112006 /Vroyo Group Home Funds Development Agreement4.doc 10/16/2006 (d) Two (2) examples of the application of the formula described above as "Resale Profit" to determine the amount of the Agency Investment Reimbursement payable on the date of a hypothetical resale of the New Home are presented as follows: EXAMPLE A: Resale to a purchaser whose Adjusted Family Income exceeds the income level of a Low Income Household or to a purchaser who will not live in the New Home as a principal residence: Assume that on the Delivery Date the purchase price of the New Home paid b~ the Qualified Homebuyer was $290,000 and that the resale occurs on the 7 anniversary following the Delivery Date; Assume the Resale Price of the New Home is $400,000; Assume that Qualified Homebuyer Equity as of the date of the resale is $23,500; and Assume that the Costs of Eligible Capital Improvements as of the date of the resale is $6,000: EXAMPLE A CALCULATION OF RESALE PROFIT: $400,0001 - $302,8502 - ($23,5003 + $5,0004 + $6,0005) = $62,6506: Resale Profit (SEE ALSO FOOTNOTES, BELOW). 1 The Resale Price of the New Home to the Successor-In-Interest in Example A. 2 The Purchase Money Mortgage amount ($200,000 conventional mortgage) plus $85,000 Agency HAP Program, plus $17,850 of deferred interest payable to the Agency under the Agency Loan for seven (7) years following the Delivery Date. 3 The Qualified Homebuyer Equity in the New Home ($5,000 cash down payment plus a $10,000 reduction of outstanding principal balance on the First Mortgage Lender loan). 4 The Resale Cost Adjustment Factor in the 7'h year following the Delivery Date. S The aggregate amount of Costs of Eligible Capital Improvements is $6,000 in this example. 6 The Resale Profit of $62,650 is subject to a 75% allocation to pay the Agency Investment Reimbursement, or $46,988 payable to the Agency (as provided in Section 6(b)). The seller of this New Home could retain only $15,662 of the "Resale Profit" in this example since the purchaser is not a Low or Moderate Income person or household. However, the portion of the "Resale Profit: if any, allocated to the seller in this example would be in addition to the seller's recapture of its equity in the New Home, plus the Costs of Eligible Capital Improvements which in this particular example is a total sum of $34,500 payable to the seller. Thus in this example, the seller's total cash realized at time of this hypothetical sale would be $50,162. (See also Footnote NO.3 and Footnote No.4, above) 4839-93~544.1 12 P:\Agendas\Agenda Attachments\Agfmts-Amend 2006\112006 Anoyo Group Home Funds Development Agreemenl4.doc 10/1612006 The Agency Investment Reimbursement amount under Example A payable at close of the resale escrow in this hypothetical example is $46,988 (e.g., 75% of $62,650) EXAMPLE B: Resale to a purchaser who the Agency has approved as a Successor-In- Interest (e.g., a purchaser whose Adjusted Family Income DOES NOT exceed the income level of a Low Income Household and who will reside in the New Home as their principal residence): Assume same facts as in Example A and that the Successor-In-Interest also pays no more than ninety-five percent (95%) of the median purchase price of the County under Section 4(b) for the New Home at a resale price of $322,000 on the 7th anniversary date following the Delivery Date; EXHIBIT B CALCULATION OF RESALE PROFIT: No Agency Reimbursement is payable to Agency as the Successor-In-Interest is a Low Income Household in this hypothetical sale. In this example, the seller of the New Home could retain the full amount of the Resale Profit. Also, note that in this example, the Successor-In-Interest's "Qualified Homebuyer Equity" will be an adjusted amount which reflects the Successor-In-Interest's new mortgage and equity basis in the New Home based upon its $322,000 purchase price for purposes of determining whether an Agency Reimbursement amount may be payable by such Successor-In-Interest in any future resale transaction during the remaining thirty eight (38) years of the term of the Qualified Residence Period. (e) The sole source of funds of the Qualified Homebuyer to pay the Agency Reimbursement Agreement shall be from the Resale Profit amount, if any, realized at the time of resale to a purchaser whose Adjusted Family Income exceeds the income level of a Low Income Household. In the event that the applicable amount of the Agency Loan is paid in full to the Agency at the time of resale of the New Home to a person or household which does not qualify as a Successor-In-Interest, the Agency shall cause to be recorded concurrently with the resale of the New Home to such person, a notice of release of the following provisions of this HOME Covenant: Section 2; Section 3; Section 5; and Section 7 Section 7. Foreclosure of Purchase Monev Mortqaqe Loan of the First Mortqaqe Lender and Aqency Riqht of First Refusal. (a) During the Qualified Residence Period, the Agency shall have the right (but not the obligation) to bid on the purchase of mortgage loan lien of the First Mortgage Lender secured by the New Home at the time of any trustee foreclosure sale or any judicial foreclosure sale. 4839-9390-0544.1 13 P:\Agendas\Agenda Attachments\Agfmts-Amend 2006\112006/vroyo Group Home Funds Development Agreement4.doc 10/1612006 (b) During the Qualified Residence Period, the Agency shall have the right of first refusal to purchase the New Home from the Qualified Homebuyer on the same terms which the Qualified Homebuyer may propose to offer the New Home for resale to a Successor-In-Interest. The Agency must exercise such a right of first refusal within thirty (30) days following written notification of the intention of the Qualified Homebuyer to resell the New Home, and if the Agency accepts the offer in writing within such time period the Agency shall be bound to complete the purchase of the New Home strictly in accordance with the offer. Thereafter the Agency shall pay the "resale price" to the Qualified Homebuyer and close an escrow for the transfer of the New Home to the Agency within sixty (60) days following written notification of the intention of the Qualified Homebuyer to resell the New House. Section 8. Covenants to run with the Land. The Qualified Homebuyer and the Agency hereby declare their specific intent that the covenants, reservations and restrictions set forth herein are part of a plan for the promotion and preservation of affordable single family housing dwelling units within the territorial jurisdiction of the Agency and that each shall be deemed covenants running with the land and shall pass to and be binding upon the New Home and each Successor-In-Interest of the Qualified Homebuyer in the New Home for the term provided in Section 10. The Qualified Home- buyer hereby expressly assumes the duty and obligation to perform each of the covenants and to honor each of the reservations and restrictions set forth in this HOME Covenant. Each and every contract, deed or other instrument hereafter executed covering or conveying the New Home or any interest therein shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations, and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed or other instrument. Section 9. Burden and Benefit. The Agency and the Qualified Homebuyer hereby declare their understanding and intent that the burden of the covenants set forth herein touch and concern the land in that the Qualified Homebuyer's legal interest in the New Home is affected by the affordable single family dwelling use and occupancy covenants hereunder. The Agency and the Qualified Homebuyer hereby further declare their understanding and intent that the benefit of such covenants touch and concern the land by enhancing and increasing the enjoyment and use of the New Home by the intended beneficiaries of such covenants, reservations and restrictions, and by furthering the affordable single family housing development goals and objectives of the Agency and in order to make the New Home available for acquisition and occupancy by the Qualified Homebuyer. Section 10. Term. (a) The provisions of Section 4 and Section 7 of this HOME Covenant shall apply to the New Home and the Qualified Homebuyer and to each Successor-In-Interest for forty-five (45) years after the Delivery Date. 4839-939()'()544.1 14 P:\Agendas\Agenda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10116/2006 (b) Except as set forth in Section 10(a), all of the other provisions of this HOME Covenant shall apply to the New Home for a term of forty-five (45) years after the Delivery Date. (c) Any provision or section of this HOME Covenant may be terminated after the Delivery Date upon the written agreement by the Agency and the Qualified Homebuyer (or the Successor-in-Interest in the New Home), if there shall have been provided to the Agency an opinion of Agency Counsel that such a termination under the terms and conditions approved by the Agency in its reasonable discretion will not adversely affect the affordable single family housing and development goals and obligations of the Agency. Section 11. Breach and Default and Enforcement. (a) Failure or delay by the Qualified Homebuyer to honor or perform any material term or provision of this HOME Covenant shall constitute a breach hereunder; provided however, that if the Qualified Homebuyer commences to cure, correct or remedy the alleged breach within thirty (30) calendar days after the date of written notice specifying such breach and shall diligently complete such cure, correction or remedy, the Qualified Homebuyer shall not be deemed to be in default hereunder. The Agency shall give the Qualified Homebuyer written notice of breach specifying the alleged breach which if uncured by the Qualified Homebuyer within thirty (30) calendar days, shall be deemed to be an event of default. Delay in giving such notice shall not constitute a waiver of any breach or event of default nor shall it change the time of breach or event of default; provided, however, the Agency shall not exercise any remedy for an event of default hereunder without first delivering the written notice of breach as specified in this Section 11. Except with respect to rights and remedies expressly declared to be exclusive in this HOME Covenant, the rights and remedies of the Agency are cumulative with any other right or power of the Agency or the City or other applicable law, and the exercise of one or more of such rights or remedies shall not preclude the exercise by the Agency at the same or different times, of any other right or remedy for the same breach or event of default. In the event that a breach of the Qualified Homebuyer may remain incurred for more than thirty (30) calendar days following written notice, as provided above, an event of default shall be deemed to have occurred. In addition to the remedial provisions of Section 5 as related to a Maintenance Deficiency at the New Home, upon the occurrence of any event of default, the Agency shall be entitled to seek any appropriate remedy or damages by initiating legal proceedings as follows: (i) by mandamus or other suit, action or proceeding at law or in equity, to require the Qualified Homebuyer to perform its obligations and 4839-9390-0544.1 15 P:\Agendas\Agenda Attachments\Agrmts.Amend 2006\112006 Nroyo Group Home Funds Development Agreement4.doc 10/1612006 . covenants hereunder, or enjoin any acts or things which may be unlawful or in violation of the rights of the Agency; or (ii) by other action at law or in equity as necessary or convenient to enforce the obligations, covenants and agreements of the Qualified Homebuyer to the Agency. (b) Except as set forth in the next sentence, no third party shall have any right or power to enforce any provision of this HOME Covenant on behalf of the Agency or to compel the Agency to enforce any provision of this HOME Covenant against the Qualified Homebuyer or the New Home. The Agency may assign the right and power to enforce the provision of this HOME Covenant against the Qualified Homebuyer or the New Home as the successor administration agency of the Agency HOME Program to the City. Section 12. Governina Law. This HOME Covenant shall be governed by the laws of the State of California. Section 13. Amendment. This HOME Covenant may be amended after the Delivery Date only by a written instrument executed by the Qualified Homebuyer (or the Successor-In-Interest, as applicable) and by the Agency. Section 14. Attorney's Fees. In the event that the Agency brings an action to enforce any condition or covenant, representation or warranty in this HOME Covenant or otherwise arising out of this HOME Covenant, the prevailing party in such action shall be entitled to recover from the other party reasonable attorneys' fees to be fixed by the court in which a judgment is entered, as well as the costs of such suil. For the purposes of this Section 14, the words "reasonable attorneys' fees" in the case of the Agency include the salaries, costs and overhead of lawyer's employed in the Office of Agency Counsel. Section 15. Severability. If any provision of this HOME Covenant shall be declared invalid, inoperative or unenforceable by a final judgment or decree of a court of competent jurisdiction such invalidity or unenforceability of such provision shall not affect the remaining parts of this HOME Covenant which are hereby declared by the parties to be severable from any other part which is found by a court to be invalid or unenforceable. Section 16. Time is of the Essence. For each provision of this HOME Covenant which states a specific amount of time within which the requirements thereof are to be satisfied, time shall be deemed to be of the essence. Section 17. Notice. Any notice required to be given under this HOME Covenant shall be given by the Agency or by the Qualified Homebuyer, as applicable, 4839-9390-0544.1 16 p:\Agendas\Agenda Attachments\Agnnts-Amend 2006\112006 Arroyo Group Home Funds Deve&opment Agreement4.doc 10/1612006 by personal delivery or by First Class United States mail at the addresses specified below or at such other address as may be specified in writing by the parties hereto: If to the Agency: Redevelopment Agency of the City of San Bernardino Attn.: Executive Director 201 North "E" Street, Suite 301 San Bernardino, CA 92401 Phone: (909) 663-1044 If to the Qualified Homebuyer: Attn.: San Bernardino, California Phone: ( ) Notice shall be deemed given five (5) calendar days after the date of mailing to the party, or, if personally delivered, when received by the Executive Director of the Agency or the Qualified Homebuyer, as applicable. IN WITNESS WHEREOF, the Qualified Homebuyer and the Agency have caused this HOME Covenant to be signed, acknowledged and attested on their behalf by duly authorized representatives in counterpart original copies which shall upon execution by all of the parties be deemed to be one original document. The recordation of this HOME Covenant is authorized under 24 CFR Part 92. Date: QUALIFIED HOMEBUYER By: By: AGENCY Redevelopment Agency of the City of San Bernardino Dated: By: Maggie Pacheco, Executive Director [ALL SIGNATURES MUST BE NOTARIZED] Approved as to Form: By: Agency Counsel 4839-9390-0544.1 17 P:\Agendas\Agenda Attachments\Agrmts-Amend 2006\112006 Arroyo Group Home Funds Development Agreement4.doc 10/1612006 EXHIBIT" A" Legal Description of the New Home APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19,19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 18 EXHIBIT "En AGREEMENT BETWEEN THE DEVELOPER AND THE PARTICIPANT DATED MARCH 3, 2006 .15 19 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT , CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL , ' CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) S5 :l Y;O~~~itdAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909-335-9576 c f~' ',' , dupreaji1~tf&l I" ",,- 1I,,,r1'.....1 " ~\iJ J't ,. . Mt f\l\jji!lJjij r\~"G'" ,,' " ,e<..' "".;1.:) \df'f:Lt.t( ,'Zi(EH_J'~ r l('f ;J JO}'.l!G TABLE OF ARTICLES 1. AGREEMENT 2. GENERAL PROVISIONS 3, DEVELOPER'S RESPONSIBILITIES 4. OWNER'S RESPONSIBILITIES 5. SUBCONTRACTS 6. TIME 7. COMPENSATION 8. COST OF THE WORK 9. CHANGES IN THE WORK 10. PAYMENT FOR CONSTRUCTION PHASE SERVICES 11. INDEMNITY, INSURANCE, BONDS, AND WAIVER OF SUBROGATION 12. SUSPENSION AND TERMINATION OF THE AGREEMENT AND OWNER'S RIGHT TO PERFORM DEVELOPER'S RESPONSIBILITIES 13. DISPUTE RESOLUTION 14. MISCELLANEOUS PROVISIONS 15. EXISTING CONTRACT DOCUMENTS ~ EXHIBITS. 1, 2, AND 3 AMENDMENT 1 ~ MJfJ AVCEDC Inifials Page 1 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ARTICLE 1 AGREEMENT This Agreement is made this '3 (' ~ in the year 8. 006 By and between the . OWNER and OWNER'~ AUTHORIZED REPRESENTATIVE (OAR) Inland Empire Concerned African American Churches, 501c3 a California Non Profit Corporation (OAR): Owusu Hodari 1777 West Baseline Avenue, San Bernardino, CA 92411 P.O Box 70036, San Bernardino, CA 92411 Office: (909) 663-0185; Fax (909) 381-4475 day of MC\vch and the DEVELOPER Arroyo Valley Community Economic Development Corporation, .501 c3 a California Non Profit Corporation PO Box 1599, San Bernardino, CA 92402 Office: (951) 662-3872; Fax (909) 335-9576 for services in connection with the following PROJECT W~s~iQe HORles Project (Infill Developm~nt) Assessor Parcel NURlbers: 0144-131-21;0144-131-36;.0144-12346; 0144-1'23-03 (4 specific lots). San Bernardino, CA 92411 The Developer will construct on behalf of the Owner four (4) single family affordable housing units, each housing unit consisting of an. approximately 1,300 sq. ft. home with three (3) bedrooms, two (2) .F bathrooms, and an attached two (2) car garage, with one housing unit to be located on each of the four Lots listed in this agreement, (the "PROJECT'). . . Notice to the parties shall be given in writing at the above Post Office Box addresses. . tjf, Nn PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.062.3872; Fax 909;335.9576 dUDre.alfi>msn.com OAR Initials AVCEDC Innials Page 2 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work .. -' Plus a Developer Fee with Profit Sharing) ARTICLE 2 GENERAL PROVISIONS 2.1 TEAM RELATIONSHIP The Owner and the DEVELOPER agree to proceed with the PROJECT on the basis of trust, good faith dealing and shall take all actions reasonably necessary to perform this Agreement in an economical and timely' manner, including consideration of design modification and altemative material or equipment that will permit the Work to be constructed in accordance with the Redevelopment Agency (the "Agency") of the City of San Bemardino's "AFFORDABLE SINGLE FAMILY HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT - FOUR AGENCY LOTS", City of San Bernardino building codes, and other applicable codes. . . The DEVELOPER agrees to procure or furnish, as permitted by the law of the State of California, the pre-development phase services, the design phase services, construction phase services, Joint Marketing services, and Sale of each Unit services as set forth below. Additionally, the Developer agrees to sign a Disposition and Development Agreement (DDA) with the Agency for the development of this PROJECT, and copy of the signed DDA will be attached as an amendment to this agreement. Developer agrees to assist the Owner in obtaining the necessary loans from the lender and to sign the loan . documents as the guarantor, Owner agrees that the Developer will sign the loan documents with the lender as the guarantor, and that the loan funds will be deposited into a Joint Account for use exclusively for the construction of this PROJECT. Developer agrees to apply approximately $175.000 of its eligible CHDO HOME Funds and Low-Mod Funds towards the development of this PROJECT as an interest-free loan . by the DEVELOPER to the PROJECT, hereafter known as the Developer Loan Funds.-I/' Owner agrees that.the Devel9per will be entitled to pay for aU expenses and costs rela~d to this PROJECT from the Developer Loan Funds for this PROJECT and that the Developer will not be required to pay for any cost or bear any expenses related to.this PROJECT from its own funds. Owner agrees that the PROJECT will receive loan funds from the Developer and not an equity contribution of the Developers actual funds. Owner also agrees that the Developer reserves the right to loan to the PROJECT its eligible City of San Bernardino Redevelopment Agency CHDO HOME Funds, Low-Mod Funds, and any other additional eligible funds to the pROJECT. The Developer reserves the right to apply additional funds to the project. Owner agrees that the Developer will be reimbursed for all funds that the Developer loans to the PROJECT, including but not limited to CHDO HOME Funds and Low-Mod Funds. Owner agrees that these funds are loans to the PROJECT and must be repaid to the Developer in full in accordance with Section 10.4.1. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909-335-9576 duprea(1ilmsn.com tl AVC~ Page 3 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON.pROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPO~T10N DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Owner agrees that the developer will be paid for the cost of the work involved in the PROJECT, a 10% Developer Fee, and 50% of the net profits after all expenses are paid. Any additional work requested or required by the owner that is not defined in this agreement shall not be. paid. using the current PROJECT funds designated by the Developers Proforma for this PROJECT or any of its phases. and thus must be paid for directly by the owner. 2.1.1 The DEVELOPER represents that it is a non-profit Community Development C9rporation (CDG) and a Certified. Community Housing Development OrganiZation (CHDO) familiar with the type of work it is undertaking. 2.1.2 Neither the DEVELOPER nor any of its agents or employees shall act on behalf of or in. the name of the Owner unless authorized in writing bi the Owner's Authorized Representative. 2.2 ARCHITECT/ENGINEER Architectural and engineering services shall be procured from licensed independent design professionals retained by the DEVELOPER or furnished by licensed employees of the DEVELOPER, or as permitted by the law of the State of Califomia. The standard of care for architectural and engineering services performed under this Agreement shall be the care and skill ordinarily used by members of the architectural and engineering professions practicing under similar condition at the same time and locality. The person or entity providing architectural and engineering services shall be referred to as the ArchilecVEngineer. If the ArchitecVEngineer is an independent design professional, the architectural and engineering services shall be procured pursuant to a separate agreement between the DEVELOPER and the ArchilecVEngineer. 2.3 EXTENT OF AGREEMENT This Agreement is solely for the benefit of the parties, represents the entire and integrated agreement between the parties, and supersedes all prior n~gotiations. representations or agreements, either written or oral. The.Owner and the DEVELOPER agree.toiook solely to.eaCh other with respect to the performance of the Agreement. The Agre.emeni and each and every provision are for the exclusive benefit of the Owner and the DEVELOPER and not for the benefit of any third party or any third party beneficiary, except to the extent expressly provided in the Agreement. 2.4 DEFINITIONS .1 The Contract-Documents consist of: PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909-335-9576 duprea@msn.com tJ# OAAlnttials AVCEW Page 4 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNrrY DEVELOPMENT CORPORATION DEVELOPMENTAGREEMENTAND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) a. Change orders and written amendments to this Agreement including exhibits and appendices, signed by both the Owner and the DEVELOPER; b. This Agreement except for the existing Contract Documents set forth in item e. below; c. The most current documents submitted to the Owner pursuant to Sub-paragraph 3.1.3, 3.1.4, 3.1.6, or 3.1.7; d. The information provided by the Owner pursuant to sub- paragraph 4.1.2.1 ; e. The Contract Documents in existence at the time of execution of this Agreement which are set forth in Article 15; f. The 2006 Affordable Single Family Housing Disposition and Development Agreement by and among the Redevelopment Agency of the City of San Bemardino, a public body corporate and politic, and Arroyo Valley Community Economic Development Corporation, a California nonprofit corporation, also qualified as a Community Housing Development Organization ("City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement") provided pursuant to Sub-paragraph 4.1.1 In case of any inconsistency, confiict or ambiguity among the Contract Documents, the documents shall govem in the order in which they are listed above. . .2 The term day shall mean calendar day, unless otherwise specifically defined. .3 DI:VELOPERS Fee means ten percent (10%) of the total actual cost of the PROJECTs combined Pre-Construction (Design Phase) .and Construction (Construction Phase) for this PROJECT. .4 Defective Work is any portion of the Work not in conformance with the Contract Documents. .5 Fast-track means an accelerated scheduling that iiwolves commencing construction prior to the completion of drawings and specifications and then using means such as bid packages and efficient coordination to compress the overall schedule. po BOX 1599, SAN BERNARDINO, CA 92402 -fL Tele. 951-662.3872; Fax909.335.9576 duprealil!msn.com : OA Initials Page 5 AVCEarO ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNllY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of theWork Plus a Developer Fee with Profit Sharing) .6 Final Completion occurs on the date when the Developer's obligations under this Agreement are completed, including the marketing and final sale of all four units. .7 A Material Supplier is a party or entity retained by the DEVELOPER to provide material and equipment for the Work. . .8 Others means other contractors and all persons at the Worksite who are not employed by DEVELOPER, its Subcontractors or Material Suppliers. .9 The Owner is the person or entity identified as such in this Agreement and includes the Owner's Authorized Representative. .10 The 2006 City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement is an initial description of the Owner's objectives, that may include budget and time criteria, space requirements and relationships, flexibility and expandability requirements, 'special equipment and systems, and site requirements, to be included as an amendment to this agreement. . .11 The PROJECT, as identified in Article 1, is the building, facility and/or other improvements for which the DEVELOPER is to perform the Work under this Agreement. .12 A Subcontractor is a party or entity retained by the DEVELOPER as an independent contractor to provide the on-site labor, materials, equipment and/or services necessary to complete a specific portion of the Work. .13 Substantial Completion of the Work, or of a designated portion, occurs on the date when the DEVELOPER'S obligations are sufficientiy complete in accordance with the Contract Documents so that the Owner can. utilize the PROJECT, or a designated portion,for the use for Yihichit is intended, in accortlance with Amendment #1 Article 2. The issuance of a Certificate of Occupancy is not a requirement for Substantial Completion if the Certificate of Occupancy cannot be obtained due to factors beyond the DEVELOPER'S control. Ii. Certificate of Substantial Completion signed by the Owner and the DEVELOPER shall confirm this date. The Certificate shall state the respective responsibilities of the Owner and the DEVELOPER for security, maintenance, heat, utilities, damage to the Work, and insurance. The Certificate shall also list the items to be completed or corrected. and establish the time for their completion and correction Estimated Date of Rnal Completion. .14 A sub subcontractor is a party or entity that has an agreement with a Subcontractor to perform any portion of the Subcontractor's work. . PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909.335-9576 dUDrea@msn.com {)f!/ OAR 16itials ;trfJ AVCEDC Initials Page 6 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) . . .15 The Wor1< is the Design Phase ServiCes procured or furnished in accordance with Paragraph 3.1, the AGREEMENT provided in accordance with Paragraph 3.2, the Construction Phase Services provided in accordance with . Paragraph 3.3, Additional Services that may be provided in accordance with paragraph 3.9, and other services which are necessary to complete the PROJECT in accordance with and reasonably inferable from the Contract Documents. .16 Worksite means the geographical area of the PROJECT mentioned in Article 1 where the Work is to be performed. .17 Net profit means the profits after all expenses are paid after the final sale of all four units. .18 Project funds means the Developer loans funds and bank loan funds. .19 Developer loan funds means any and all eligible funds that the Developer loans to this PROJECT, including but not limited to CHDO HOME Funds and Low/Mod Funds. The Developer reserves the right to apply additional funds to the project. ARTICLE 3 DEVELOPER'S RESPONSIBILITIES The DEVELOPER shall be responsible for signing the loan documents as the guarantor along with the Owner as the borrower, for procuring or furnishing the design, for the construction of the Work. and .for. serving as the lead agency ip the .Joint Mal'keting and Sale of each home. The DEVELOPER shall exercise reasonable skill and judgment in the performance of its services consistent with the team relationship described in Paragraph 2.1, but does not warrant nor guarantee schedules and estimates included as a part of this AGREEMENT. The Developer will provide for the inspection and testing services during construction as required by law or as mutually agreed; and The DEVELOPER and the Owner may establish a Fast-track approach to the design and construction services necessary to complete the PROJECT. Such agreement establishing a Fast-track approach and the Schedule of the Work shall be included as an exhibit to this Agreement. In the absence of such agreement, the parties shall proceed in accordance with paragraphs 3.1 and 3.3 below. 3.1 DESIGN PHASE SERVICES PO BOX 1599, SAN BERNARDINO, CA 92402 Tele, 951-662-3872; Fax 909.335-9576 dupreWlmsn.com OARetI AVCE~ Page 7 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ,3.1.1 PRELIMINARY EVALUATION The DEVELOPER shall review the City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement to ascertain the requirements of the PROJECT and shall verify such requirements with the City of San Bemardino Redevelopment Agency. The DEVELOPER'S review may also provide to the Owner a preliminary evaluation of the site with regard to access, traffic, drainage. parking. building placement and other considerations affecting the building, the environment and energy use. as well as information regarding applicable govemmentallaws, regulations and requirements. The DEVELOPER may also propose altemative architectural. civil, structural, mechanical. 'electrical and other systems for review by the Owner. to determine the most desirable approach on the basis of cost. technology. quality and speed of delivery. The DEVELOPER may also review existing test reports but will not undertake any independent testing nor be required to fumish types of information derived from such testing in its Preliminary Evaluation. Based upon its review and verification of the City of San Bemardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement and other relevant information the DEVELOPER shall provide a Preliminary Evaluation of the PROJECT's feasibinty. The DEVELOPER'S Preliminary Evaluation shall specifically identify any deviations from the City of San Bemardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement. h.1.2 PRELIMINARY SCHEDULE The DEVELOPER shall prepare a preliminary schedule of the Work, The Owner shall review milestone dates established in the preliminary schedule of the Work. The schedule shall show the activities of the DEVELOPER necessary to meet the City of San Bemardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement completion requirements. The schedule shall be updated periodically with the level of detail for each schedule update reflecting the infonnation then available, if an update indicates that a previously approved schedule will not be met. the DEVELOPER shall inform the owner of the corrective actions during their regularly scheduled meetings. ' 3.1.3 PREL1MINMY ESTIMATE . When sufficient PROJECT information has been identified, the DEVELOPER shall prepare a preliminary estimate utilizing area. volume or similar conceptual estimating techniques. The estimate shall be updated periodically with the level of detail for ea'ch estimate update reflecting the infonnation then available. If the preliminary estimate or any update exceeds the PROJECT's budget. the DEVELOPER shall infonn the Owner. 3.1,4 SCHEMATIC DESIGN DOCUMENTS The DEVELOPER shall submit copies of the Schematic Design Documents. based on the Preliminary Evaluation. Schematic Design Documents shall include drawings. outline specifications and other conceptual documents illustrating the PROJECT's basic elements. scale. and their relationship to the Worksite. One set of these documents shall be fumished to the Owner for review. When the DEVELOPER submits the Schematic Design Documents the DEVELOPER shall identify in writing all material changes and deviations that have taken place from the PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335-9576 duprea@msn.com tJff OAR Initials MJ/ AVCEF;f, Initials Page 8 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c){3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL . CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) DEVELOPER'S Prelimina/)' Evaluation, schedule and estimate. The DEVELOPER shall update the prelimina/)' schedule and estimate based on the Schematic Design Documents. 3.1.5 PLANNING PERMITS The DEVELOPER shall obtain and pay for planning permits necessa/)' for the construction of the PROJECT utilizing the available PROJECT funds. 3.1.6 DESIGN DEVELOPMENT DOCUMENTS The DEVELOPER shall submit to the Owner copies of the Design Developmeni Documents based on the Schematic Design Documents, The Design Development Documents shall further define the PROJECT including drawing and outline specifications fixing and describing the PROJECT size and character as to site utilization, and other appropriate elements incorporating the structural, architectural, mechanical and electrical systems. One set of these documents shall be fumished to the Owner for review. When the DEVELOPER submits the Design Development Documents, the DEVELOPER shall identify inwriting all material change,s and deviations that have taken place from the Schematic Design Documents. The DEVELOPER shall update the schedule and estimate based on the Design Development Documents. 3.1.7 CONSTRUCTION DOCUMENTS The DEVELOPER shall submit to the Owner copies of the Construction Documents based on the Design Development Documents. The Construction Documents shall set forth in detail the requirements for construction of the Work, and shall consist of drawings and specification based upon codes, laws and regulations enacted at the time of their preparation. When the DEVELOPER submits the Construction Documents, the DEVELOPER shall identify in writing all material changes and deviations that have taken place from the Design Development Documents. Construction shall be in accordance with the Construction Documents. 3.1.8 OWNERSHIP OF DOCUMENTS . The Developer shall maintain ownership . of the property rights, except for 9OPyrights,of all documents, drawing, specifications, electronic dala and information prepared, provided or procured by the DEVELOPER, its Architect/Engineer, Subcontractors and consullants, and distributed to the Owner for this PROJECT. ("DEVELOPER Documents") 3.2 REVIEW AND AMENDMENTS TO AGREEMENT The DEVELOPER shall meet with the Owner to review the AGREEMENT. In the event that the Owner has any comments relative to the AGREEMENT, or finds any inconsistencies or inaccuracies in the information presented, the parties shall discuss possible resolutions and make changes in the form of an amendment to this Agreement. 3.2.1 DEVELOPER'S CONTINGENCY The AMENDMENTS to the AGREEMENT will contain, as part of the estimated Cost of the Work, the DEVELOPER'S' Contingency, and a sum mutually agreed upon and monitored by the DEVELOPER and PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335.9576 duprea@msn.com (() . J/ OAR Initials AFD AVCEDC Initials Page 9 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c){3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) the Owner for use at the DEVELOPER'S discretion to cover costs which are properly . reimbursable as a Cost of the Work but are not the basis for a Change Order. 3.3 CONSTRUCTION PHASE SERVICES; MARKETING AND SALE OF UNITS 'PHASE SERVICES 3,3.1 The Construction Phase will commence upon the Completion of the DESIGN PHASE SERVICES. If construction commences prior to the DESIGN PHASE SERVICES, the DEVELOPER shall prepare for the Owner's information purposes only a schedule of work to be performed. 3.3.2 In order to complete the Work, the DEVELOPER shall provide all necessary construction supervision, inspection, construction equipment, labor, materials, tools, and subcontracted items. 3,3,3 The DEVELOPER shall give all notices and comply with all laws and ordinances legally enacted at the date of execution of the Agreement, which govern the proper performance of the Work. 3.3.4 The DEVELOPER shall obtain and pay for the building permits necessary for the construction of the PROJECT from the Project Funds. 3.3.5 The DEVELOPER shall keep such full and detailed accounts as are necessary for proper financial management under this Agreement. The DEVELOPER shall preserve all such records for a period of three years after the final payment or longer where required by law, owner shall have the right to review and audit such records at the owner's expense. 3.3.6 The DEVELOPER shall provide periodic written reports as required by the DDA to the oWner on the progress of the Work in such detail as deemed necessary by the DEVELOPER 3.3.7 The DEVELOPER shall develop a system of cost reporting for the Work, including regular monitoring of actual costs for activities in progress and estimates for uncompleted tasks and proposed changes in the Work. Copies of the reports shall be presented to the Owner at mutually agreeable intervals. 3,3,8 The Joint Marketing and Sale of Units Phase will commence during the Design and Construction Phases. The Developer will serve as the lead agency in the marketing and sale of the units. The Developer and the Owner will develop the affirmative marketinQ procedures and requirements for the Units. They will include: Methods for informing the public; ;'-,-. PO BOX 1599, SAN BERNARDINO, CA 92402 Tete. 951-662.3872; Fax 909.335-9576 dUDrea(il1msn.com el AVCE~ Page 10 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Requirements and practices that Developer and Owner will adhere to in order to carry out the City of San Bemardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement affirmative marketing procedures and requirements; Procedures used by Developer and Owner to inform and solicit applications from persons in the housing market area who are not likely to apply without special outreach; Records that will be kept describing actions taken by Developer and Owner to affirmatively market units and records to assess the results of these actions; and A description of how Developer and Owner will assess the success of affirmative marketing actions and what corrective actions will be taken where affirmative marketing requirements are not met. 3.3.9 The Developer and Owner agree to Market and Sell each unit in a timely manner. It is the Developers and Owner's sole responsibility to sell each unit to qualified buyers as fast as possible to ensure cost containment The Developer as the lead agency will have the final authority to approve all qualified buyers. Precise guidelines for performance by both parties will be set forth in the Marketing and Sales Plan for each unit 3.4 SCHEDULE OF WORK The DEVELOPER shall prepare and submit a Schedule of Work for the Owner's informational purposes. This schedule shall indicate the dates for the start and completion of the various stages of the Work, including the dates when information and approvals are required from the Owner. The Schedule shall be revised as required by the conditions of the Work. 3.5 SAFETY OF PERSONS ANDPROPERTY 3.5.1 SAFETY PRECAUTIONS AND PROGRAMS The DEVELOPER shall have responsibility for safety precautions and programs in the performance of the Work. While the provisions of this Paragraph establish the responsibility for safety between the Owner and the D~ELOPER. they do not relieve Consultants and Subcontractors of their responsibility for the safety of persons or property in the performance of their work, nor for compliance with the provisions of applicable laws and regulations. 3.5.2 The DEVELOPER shall seek to avoid injury. loss or damage to persons or property by taking reasonable steps to protect: .1 Its employees and other persons at the Worksite; .2 materials. supplies and equipment stored at the Worksite for use in performance of the Work; and PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; fax 909-335-9576 dupreatDlmsn.com tJj! OAR Initials ~ AVCEDC Inttials Page 11 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION. A NON-PROFIT IRS SEcnON 501(<:)(3) COMMUNITY DEVELOPMENT CORPORA nON DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .3 The PROJECT and all property located at the Worksite and adjacent to work areas, whether or not said property or structures are part of the PROJECT or involved in the.Work. 3.5.3 DEVELOPER'S SAFETY REPRESENTATIVE The DEVELOPER shall designate an individual at the Worksite who shall act as the DEVELOPER'S designated safety representative with a duty to prevent accidents. Unless otherwise identified by the DEVELOPER in writing, the designated safety representative shall be the DEVELOPER'S PROJECT superintendent. 3.5.4 Damage or loss not insured under property insurance which may arise from the performance of the Work, to the extent of the negligence attributed to such acts or omissions of the DEVELOPER, or anyone for whose acts the DEVELOPER may be liable. shall be promplly remedied by the DEVELOPER. Damage .or loss attributed to the acts or omissions of the Owner or Others and not to the DEVELOPER shall be promptly remedied by the Owner. 3.6 HAZARDOUS MATERIALS 3.6.1 A Hazardous Material is any substance or material identified now or in the future as hazardous under any federal, state or local law or regulation, or any other substance or material which may be considered hazardous or otherwise subject to statutoiy or regulatory requirements goveming handling, disposal and/or clean-up. The DEVELOPER shall not be obligated to commence or continue work until all Hazardous Material discovered at the Worksite has been removed, rendered or determined to be harmless by the Owner as certified by an independent testing laboratory approved by the appropriate government agency. 3.6.2 If after the commencement of the Work, Hazardous Material is discov.ered at the PROJECT, the DEVELOPER shall be entitled to immediately stop Work in the affected area. The DEVELOPER shall report the condition tQthe Owner and, if required,the government agenc:ywith jurisdiction. The DEVELOPER sha!lnot be requiredtoperfonn any Work relaiing to or in the area of Hazardous Material withQut written mutual agreement. 3.6.3 Unless agreed to by the Owner and Developerin an Amendment to this Agreement the Owner shall be responsible for retaining an independent testing laboratory to .determine the nature of the material encountered and whether it is a Hazardous Material requiring corrective measures and/or remedial action. Such .measures shall be . the sole responsibility of the Owner, and shall be. perfonned in a manner minimizing any adverse effects upon the Work of the DEVELOPER. The DEVELOPER shall resume Work in the area affected by any Hazardous Material only upon written agreement between the parties after the Ha;!Cardous Material has been removed or rendered hannless and only after approval, if necessary, of the government agency or agencies with jurisdiction. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335-9576 duprea@msn.com ;1,1/ OAR Inttials ArD AVCEDC Initials Page 12 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501 (c)(3) COMMUNITY DEVELOPMENT CORPORATION . DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BElWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 3.6.4 If the DEVELOPER incurs additional costs and/or is delayed due to the presence or remediation of Hazardous Material, the DEVELOPER shan be entitled to an equitable . adjustment in the Percentage of the Profits after all expenses are paid. compensation for Design Phase Services, the DEVELOPER'S Fee and/or the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion. 3.6.5 Provided the DEVELOPER, its Subcontractors, Material Suppliers and Subcontractors, and the agents, officers, directors and employees of each of them, have not, acting under their own authority, knowingly entered upon any portion of the Work containing Hazardous materials, and to the extent not caused by the negligent acts or omissions of the DEVELOPER, its Subcontractors, Material Suppliers and Subcontractors, and the agents, officers, directors and employees of each of them, the Owner shall defend, indemnify and hold hannless the DEVELOPER, its Subcontractors and Sub subcontractors, and the agents, officers, directors and employees of each of them, from and against any and all direct claims, damages, losses, costs and expenses, including but not limited to attorney's fees, costs and expenses incurred in connection with any dispute resolution process, arising out of or relating to the perfonnance of the Work in any area affected by Hazardous Material. To the fullest extent pennitled by law, such indemnification shall apply regardless of the fault, negligence, breach of warranty or contract, or strict liability of the Owner. 3.6.6 Material Safety Data (MSD) sheets as required by law and pertaining to materials or substances used or consumed in the performance of the Work, whether obtained by the DEVELOPER, Subcontractors, the Owner or Others, shall be maintained at the PROJECT by the DEVELOPER and made available to the Owner and Subcontractors. 3.6.7 During the DEVELOPER'S performance of the Work, the DEVELOPER shall be responsible for the proper handling of all materials brought to the Worksite by the DEVELOPER. Upon the issuance of the Certificate of Substantial Completion, the Owner shall beresponsible under this Paragraph for materials and substances brought to the site by the DevELOPER if such materials or substances are required by the Contract Documents. 3.6.8 The tenns of this Paragraph 3.6 shall survive the completion of the Work under this Agreement and/or any tennination of this Agreement 3.7 WARRANTIES AND COMPLETION 3.7.1 The DEVELOPER. warrants that all materials and equipment furnished under the Construction Phase of this Agreement will be new unless otherwise specified, of good quality, in confonnance with the Contract Documents, and free from defective workmanship and materials. Warranties shall commence on the Estimated Date of Substantial Completion of the Work or of a designated portion. The DEVELOPER agrees to correct all construction performed under this Agreement which is defective in PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909.335-9576 duprea((i!msn.com Iflt;/. OAR Initials tJp() AVCEDC Initials Page 13 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) workmanship or materials within a period of one year from the Estimated Date of Substantial Completion or for such longer periods of time as may be set forth with respect to specific warranties required by the Contract Documents. 3.7.2 The DEVELOPER shall collect all written warranties and equipment manuals and deliver copies of them to the new homeowner at the dose of escrow 3.7.3 The DEVELOPER shall direct the checkout of utilities and start up operations, . and adjusting and balancing of systems and equipment for readiness. 3.8 CONFIDENTIALITY The DEVELOPER shall treat as confidential and not disclose to third persons, except Subcontractors. Sub subcontractors and the Architect/Engineer as is necessary for the performance of the Work, or use for its own benefit any of the Owner's developments, confidential information, know-how, discovenes, production methods and the like that may be disclosed to the DEVELOPER or which the DEVELOPER may acquire in connection with the Work. The Owner shall treat as confidential information all of the DEVELOPER'S estimating systems and . historical and parameter cost data that may be disclosed to the Owner in connection with the performance of this Agreement. 3.9.1 INCLUDED SERVICES The DEVELOPER Shall provide or procure the following Services at the sole discretion of the Developer. If the owner requires additional services beyond what is listed below, then a written amendment to this agreement shall define the extent of such Addifional Services before the DEVELOPER performs them. If such an Amendment to this AGREEMENT has been established for the Additional Work or any portion of the Work, such Additional Services shall be considered a Change in the Work, as set forth in the Amendment to this agreement. .1 Development of the City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement, establishing the PROJECT budge~ investigating sources of financing, geDeral business planning and other information and documentation as may be required' to establish the feasibility of the PROJECT. .2 Consultations, negotiations, and documentation supporting the procurement of PROJ ECT financing. .3 Surveys, site evaluations, legal descriptions and aerial photographs. .4 . Appraisals of existing properties, and developed properties. .5 Soils, subsurface and environmental studies, reports and investigations required for submission to the govemmental authorities or others having jurisdiction over the PROJECT. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909-335-9576 duoreaili>msn.com iZti ;tpO AVCEDC Initials Page 14 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .6 Cons\jltations and representations before govemmental authorities or others having jurisdiction over the PROJECT other than nonnal assistance in securing building penn its. .7 Investigations or making measured drawings of existing conditions. .8 Artistic rendering, models and mockups of the PROJECT or any part of the PROJECT of the Work as deemed necessary by the Developer. 3.9.2 ADDITIONAL SERVICES If additional services beyond what is listed under Included Services are required by the owner, then a written amendment to this agreement shall define the extent of such Additional Services before they are performed by the DEVELOPER. .If such an Amendment to this AGREEMENT has been established for the Additional Work or any portion of the Work, such Additional Services shall be considered a Change in the Work, as set forth in the Amendment to this agreement. .1 The premium portion of overtime work requested by the Owner, including productivity impact costs, other than that required by the DEVELOPER to maintain the Schedule of Work. These services are not considered as included in the Additional Services "provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. " .2 Out-of-town travels by the Architect-Engineer in connection with the Work, except between the ArchitecUEngineer's office, the DEVELOPER'S office, the Owner's office and the Worksite. These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to thisAgreement. " .3 Services requested by the Owner or required by the Work which are not specified in the Contract Documents and which are not "normally part of generally accepted design and construction practice. These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. ;4 Serving or preparing to serve as an expert witness in connectionwith any proceeding, legal or otherwise, regarding the PROJECT. These services are not considered as Included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335.9576 duprea@msn.com tJ.1/ OAR Inffials ArD AVCEDC Inffials Page 15 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501 (c)(3) COMMUNITY DEVELOPMENT CORPORATION . DEVELOPMENT AGREEMENT AND GENERAL . . CONDITIONS BElWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) .5 Document reproductions exceeding the limits provided for in this AgreemenL These services are not considered as included in the Additional Services provided by the Developer and shall be covered under a Contract Change Order and shall be covered by a written Amendment to this Agreement. 3.10 DEVELOPER'S .REPRESENTATIVE The DEVELOPER shall designate a person(s) who shall be the DEVELOPER'S authorized representative. The Developer reserves the right to change its authorized representatives or add additional persons as deemed necessary by the Developer. The DEVELOPER'S Representatives are Antonio F. Dupre Sr. and AnQela Saunders. ARTICLE 4 OWNER'S RESPONSIBILITIES 4.1 INFORMATION AND SERVICES PROVIDED BY OWNER 4.1.1 The Owner shall provide to the Developer copies of all documents provided to the Owner by the Agency. in a timely manner 4.1.2 The DEVELOPER shall be entitled to rely on the completeness and accuracy of the information and services .. required by this Paragraph 4.1. 4.2 OWNERS RESPONSIBILITIES DURING DESIGN PHASE 4.2.1 The Owner shall provide to the Developer the City of San. Bernardino Redevelopment Agency's development and design requirements at the inception of the Design Phase and shall review the PROJECT schedule, estimates. Preliminary Estimate, Schematic Desigh Documents. Design Development docliments and ConstrucliQn Documents furnished during the Design Phase as set forth in Paragraph 3.1. and any Amendments to this AGREEMENT as set forth in Paragraph 3.2 to ensure that the Owner is familiar with the scope of the PROJECT. 4.3 RESPONSIBILITIES DURING CONSTRUCTION PHASE 4.3.1 The Owner shall review the Schedule of the Work as set forth in Paragraph 3.4 and the milestone dates set forth. 4.3.2 If the Owner becomes aware of any error, omission of failure to meet the requirements of the Contract Documents or any fault or defect in the Work, the Owner shall give prompt written notice to the DEVELOPER. PO BOX 1599. SAN BERNARDINO. CA 92402 Tele. 951-662-3872; Fax 909.335.9576 . duprea@msn.com f!l: Jf11) AVCEDC Innials Page 16 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost ofthe Work Plus a Developer Fee with Profit Sharing) 4.3.3 The Owner shall not communicate direclly with the DEVELOPER'S Subcontractors, Material Suppliers and the ArchitecUEngineer. The Owner shall have no contractual obligations to Subcontractors, Suppliers, or the ArchitecUEngineer. 4.3.4 The Owner and the Developer shall joinlly provide insurance for the PROJECT as provided in Article 11 . 4.4 OWNER'S AUTHORIZED REPRESENTATIVE The Owner's Authorized Representative is Owusu Hodari. The Owners Authorized Representative: .1 shall be the initial person to contact for all communications from DEVELOPER; .2 agrees to fumish the infonnation and services pursuant to Paragraph 4.1 so as not to delay the DEVELOPER'S work; and .3 shall have authority to bind the Owner in all matters requiring the Owner's approval, authorization or written notice. If the Owner changes its representative or the representative's authority as listed above, the Owner shall notify the DEVELOPER in writing in advance. 4.5 ADDITIONAL SERVICES If Owner wants any of these services they are a contract change order subject to the requirements stated in Article g of this Agreement. 4.5.1 Any revisions to the Schematic Design, Design Development. Construction Documents or document forming the basis of Amendments to the DEVELOPMENT AGREEMENT after they have been approved by the Owner. These services.a,re notconsili!erelilllo;inoludll,lI intheA~~itionaIServiQes provided by the Developer ;md Slu!lIbe covered under a 'Cllintract Change Order and shall be covered by a written Amendment to this Agreement. ARTICLE 5 SUBCONTRACTS Work not perfonned by the DEVELOPER with its own forces shall be perfonned by Con$ultants, Subcontractors or the ArchitecUEngineer. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335-9576 dupreallilmsn.com IJ# OAR Initials ~ AVCEDC Initials Page 17 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFfT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 5.1 RETAINING SUBCONTRACTORS The DEVELOPER shall retain all Consultants, subcontractors, and the Architect/Engineer. The Owner may propose subcontractors to be considered by the DEVELOPER, but the Developer is under no obligation to retain any Consultants, Subcontractors or the Architect/Engineers proposed by the Owner. The DEVELOPER shall not be required to retain any subcontractor to whom the DEVELOPER has an objection. 5.2 MANAGEMENT OFCONSUL T ANTS, SUBCONTRACTORS AND. ARCHITECT/ENGINEER The DEVELOPER shall be responsible for the management of the Consultants, Subcontractors and the Architect/Engineer in the performance of their work. . 5.3 BINDING OF CONSULTANTS, ARCHITECT/ENGINEER, SUBCONTRACTORS AND MATERAL SUPPLIERS The DEVELOPER agrees to bind every Consultant. Architect/Engineer, Subcontractor and Material Supplier (and require every Consultant, Architect/Engineer, Subcontractor to so bind its Consultant, Architect/Engineer, Subcontractors and Material Suppliers) to all provisions of this Agreement and the Contract Documents as they apply to the Consultant, Architect/Engineer, Subcontractor's' and Material Supplier's portions of the Work. 5.4 LABOR RELATIONS The Developer will handle all labor relations with its employees, subcontractors, Architect/Engineer and Consultants based on its in-house policies and procedures. ARTICLE 6 TIME 6.1 DATEOF COMMltNCEMENTThe DateofCol1imencement is the effective date of this Agreement as first written in Article 1, and the signing of this agreement will be considered as the official notice to proceed. The Work shall proceed in general accordance with the Schedule of Work as such schedule may be amended from time to time, subject, however, to other provisions of this Agreement. . 6.2 SUBSTANTlAUFINAL COMPLETION Unless the parties agree otherwise, the Estimated Date of Substantial Completion and/or the Estimated Date .of Final Completion shall be established in this Agreement subject to adjustments as provided for in the Contract Documents. If such dates are not established upon execution of this Agreement, at such time as the Estimated Date of Substantial Completion and the Estimated Date of PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909.335-9576 duprea@rnsn.com all o Inffials 4W A~CEDC Initials Page 18 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501 (c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER. (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Final Completion are known by the Developer, the Developer will provide svch dates to the Owner. 6.2.1 Time limits stated in the Contract Docvments are of the essence. 6.2.2 The DEVELOPER shall not commence the Work before the effective date of insvrance that is reqvired to be provided by the DEVELOPER and the Owner. 6.2.3 The Estimated Date of Svbstantial Completion and/or the Estimated Date of Final Completion, and the Schedule of Work upon which the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion may be adjusted by; .1 a statement of Additional Services included, if any; .2 the time limit for acceptance of the . AGREEMENT; .3 a statement of any work to be self-perfonned by the DEVELOPER; and 6.3 DELAYS IN THE WORK 6.3.1 If cau,ses beyond the DEVELOPER'S control delay the progress of the Work, then compensation for Design Phase Services, the DEVELOPER'S Fee and/or the Estimated Date of Substantial Completion andlor the Estimated Date of Final Completion shall be modified by Change Order as appropriate. Such cavses shall inclvde bvt not be limited to: changes ordered in the Work, acts or omissions of the Owner orOthers, the OWner preventing the DEVELOPER from perlonningthe Work pendirtgdispute resolution, Hazardous Materials or differing site conditions. Causes beyond the control of the DEVELOPER do not include acts or omissions on the part of the DEVELOPER. Consultants, Subcontractors, Sub-subcontractors, Material Suppliers or the Architect/Engineer. 6.3.2 To the extent a delay in the progress of the Work is caused by adverse weather conditions not reasonably anticipated, fire, unusual transportation delays, general labor : disputes impacting the PROJECT but not specifically related to the Worksite, governmental agencies, or unavoidable accidents or circumstances, the DEVELOPER shall be entitled to reimbursement of its additional actual costs caused by the delay and an extension of the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335-9576 duorea(iilmsn.com &t! OAR Initials Aft) AVCEDC Initials Page 19 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORA nON A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (When~ the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 6.3.3 In the event delays to the PROJECT are encountered for any reason, the parties agree to undertake reasonable steps to mitigate the effect of such delays. , ARTICLE 7 COMPENSATION 7.1 DESIGN PHASE COMPENSATION 7.1.1 . To the extent required by applicable law, the cost of services performed directly by the Architect/Engineer is computed separately and is independent from the DEVELOPER'S compensation for work or services performed directly by the DEVELOPER; these costs shall be shown as separate items on applications for payment. If an Architect I Engineer is retained by the DEVELOPER, the payments to the Architect/Engineer shall be as detailed in a separate agreement between the DEVELOPER and the Architect I Engineer. 7.1.2 The Owner agrees that the DEVELOPER will be paid from the PROJECT loan funds for services performed during the Design Phase as described in Paragraph 3.1, including preparation of any Amendment to this AGREEMENT, if applicable, as described in Paragraph 3.2. as follows: The Developer shall be compensated for the actual cost of all services and fees and shall be payable when invoiced. If a stipulated sum is agreed to by the Owner and the Developer then the agreed to portion of the sum shall be payable each month. 7.1.3 Compensation for Design Phase Services, as part of the Work, shall include the DEVELOPER'S Fee as established in Paragraph 7.3, paid in proportion to the services performed, subject to adjustment as provided in Paragraph 7.4. 7.1.4 Within fifteen (15) days after receipt of each monthly application for payment, the Owner agrees that the DEVELOPER will be paid from the PROJECT funds paid directly to the DEVELOPER the appropriate amount for which application for payment is made, less amounts if any, previously paid. 7.1.5 If the DEVELOPER is not paid at the time payment of any amount becomes due, then the DEVELOPER may, at any time thereafter, upon serving written notice that the Work will be stopped within seven (7) days after receipt of the notice by the Owner, and. after such seven (7) day period, stop the Work until payment of the amount owing has been received. pO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909-335-9576 duprea@msn.com Ilm~ 4tJ7D AVCEDC Initials Page 20 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 7.1.6 Payments due pursuant to. Sub-paragraph 7.1.5, may bear interest from the date payment is.due at the prime rate prevailing at the location of PROJECT. 7.2 CONSTRUCTION PHASE COMPENSATION .7.2.1 The Owner agrees that the DEVELOPER will be paid from the PROJECT loan funds for Work performed following the commencement of the Construction Phase on the following basis: .1 the Cost of the Work allowed in Article 8; and .2 the DEVELOPER'S Fee paid in proportion to the services performed subject to adjustment as provided in Paragraph 7.4. 7.2.2 The compensation to be paid under this Paragraph 7.2 shall be limited to the AGREEMENT established and any Amendments thereof, as the AGREEMENT may be adjusted under Article g. 7.2.3 Payment for Construction Phase Services shall be as set forth in Article 10. If Design Phase Services continue to be provided after construction has commenced, the DEVELOPER shall continue to be compensated as provided in Paragraph 7.1, or as mutually agreed. 7.3 DEVELOPER'S FEE The DEVELOPER'S Fee shall be as follows, subject to adjustment as provided in Paragraph 7.4: Ten percent (10%) of the total actual cost of the PROJECTs combined Pre-Construction (Design Phase) and Construction (Construction Phase) for this PROJECT.. The stipulated sum is due and payable each month. The portion of the sum due monthly will be determined by the Developer and based on the percentage of work performed for the month that is being billed. 7.4 ADJUSTMENT IN THE DEVELOPER'S FEE Adjustment in the DEVELOPER'S Fee shall be made as follows: .1 for changes in the Work as provided in Article g, the DEVELOPER'S Fee shall be adjusted as follows: Ten percent (10%) of the increase dollar value of the changes in the Work as provided in Article g, plus the total cost of the PROJECTs combined Pre-Construction (Design Phase) and Construction (Construction Phase) for this PROJECT. . .2 for delays in the Work notcaused by the DEVELOPER, except as provided in Sub-paragraph 6.3.2, there will be an equitable adjustment in the DEVELOPER'S Fee to compensate the DEVELOPER for increased expenses; and PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335-9576 duorealil!msn.com -t!(I R nilials .4fV AVCEDC Initials Page 21 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501 (c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Feewith Profit Sharing) .3 if the DEVELOPER is placed in charge of managing the replacement of an insured or uninsured loss, the DEVELOPER shall be paid an additional fee in . the same proportion that the DEVELOPER'S Fee bears to the estimated Cost of the Work for the replacement 7.5 MARKETING AND SALE OF UNITS PHASE 7.5.1 The Owner and the DEVELOPER agree to jointly develop and implement the Marketing and Sale of Units Phase on the following basis: .1 the Cost of the Work allowed in Article 8; and .2 the cost shall not exceed the line item budget for Marketing and Sale of Units Phase. ARTICLE 8 COST OF THE WORK The Owner agrees that the DEVELOPER will be paid from the PROJECT loan funds for the Cost of the Work as defined in this Article. This payment shall be in addition to the DEVELOPER'S Fee stipulated in Paragraph 7.3. 8.1 COST ITEMS FOR DESIGN PHASE SERVICES 8.1.1 Compensation for Design Phase Services as provided in Paragraph 7.1. 8.2.COST ITeMs FOR CONSTRUCTION PHASE SERVICES 8.2.1 Wages paid for labor in the direct employ of the DEVELOPER in the performance of the Worle 8.2.2 Reasonable transportation, travel, hotel and moving expenses of the DEVELOPER'S personnel incurred in connection with the Work. 8.2.3 Ccst of all matenals, supplies and equipment incorporated in the Work. including costs of inspection and testing if not provided by the Owner, transportation, storage and handling. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909-335:9576 duorea@msn.com IJ;/ OAR Innials MD AVCED'C Initials Page 22 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing). 8.2.4 Payments made by the DEVELOPER to Subcontractors for work perfonned under this Agreement. 8.2.5 Fees and expenses for design services procured or fumished by the DEVELOPER except as provided by the ArchitecVEngineer and compensated in Paragraph 7.1. 8.2.6 Cost, including transportation and maintenance of all materials, supplies, equipment, temporary facilities and hand tools not owned by the workers that are used or consumed in the perfonnance of the Work, less salvage value and/or residual value; and . cost less salvage value on such items used, but not consumed that remain the property of the DEVELOPER. 8.2.7 Rental charges of all necessary machinery and equipment, exclusive of hand tools owned by workers, used at the Worksite, whether rented from the DEVELOPER or Others, including installation, repair and replacement, dismantling, removal, maintenance, transportation and delivery costs. Rental from unrelated third parties shall be reimbursed at actual cost. Rentals from the DEVELOPER or its affiliates, subsidiaries or related parties shall be reimburses at the prevailing rates in the locality of the Worksite up to eighty-five percent (85%) of the value of the piece of equipment. 8.2.8 Cost of the premiums for all insurance and surety bonds which the DEVELOPER is required to procure or deems necessary, to conduct the business associated with the PROJECT. 8.2.9 Sales, use, gross receipts or other taxes, tariffs or duties related to the Work for which the DEVELOPER is liable. 8.2.10 Pennits, fees, licenses, tests, royalties, damages for infringement of patents and/or copyrights, including costs of defending related suits for which the DEVELOPER is not responsible as setfQrth in Paragraph 3.7, and deposits lost for causes other than the DEVELOPER'S negligence. 8.2.11 . Losses, expenses or damages to the. extent not compensated by insurance or otherwise, and the cost of the corrective work and/or redesign during the Construction Phase and for a period of one year following the Estimated Date of Substantial Completion, provided that such corrective work and/or redesign did not arise from the negligence of the DEVELOPER. 8.2.12 All costs associated with establishing, equipping, operating, maintaining and demobilizing the field office. 8.2.13 Reproduction costs, photographs, cost of telegrams, facsimile transmissions, long distance telephone calls, data processing services, postage, express deliver PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.062.3872; Fax 909.335.9576 duprea(il1msn.com 1211 OAR Initials Af1) AVCEDC Initials Page 23 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORA TION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) charges, telephone service at the Worksite and reasonable petty cash expenses at the field office. 8.2.16 All water, power and fuel costs necessary for the Work. 8.2.17 Cost of removal of all non-hazardous substances, debris and waste materials. 8.2.18 Costs incurred due to an emergency affecting the safety of persons andlor property. 8.2.19 Legal, mediation and arbitration fees and costs, other than those covered by insurance arising from disputes between the Owner and the DEVELOPER, reasonably and properly resulting from the DEVELOPER'S performance of the Work 8.2.20 All costs directly incurred in the performance of the Work or in connection with the PROJECT, and not included in the DEVELOPER'S Fee as set forth in Article 7, which are reasonably inferable from the Contract Documents as necessary to produce the intended results. 8.3 COST ITEMS FOR MARKETING AND SALE OF UNITS PHASE SERVICES 8.3.1 All costs directly incurred in the performance of the Work or in connection with the Marketing and Sale of each Unit, and not included in the DEVELOPER'S Fee as set forth in Article 7, which are reasonably inferable from the Contract Documents as necessary to produce the intended results. 8.4 DISCOUNTS All discounts for prompt payment shall accrue to the Owner and Developer jointly, and shall be included in the profits to be shared by the Owner and Developer. ARTICLE 9 CHANGES IN THE WORK Changes in the Work are within the general scope of this Agreement and may be accomplished. without invalidating this Agreement, by Change Order, Work Change Directive, or a minor change in the work, subject to the limitations stated in the Contract Documents. . 9.1 CHANGE ORDER PO BOX 1599, SAN BERNARDINO, CA 92402 T ele. 951.062-3872; Fax 909.335-9576 duprealiDmsn.com tJrt/ OAR Initials Arf) AVCEDC Initials Page 24 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 9.1.1 The DEVELOPER may initiate and/or the Owner, without invalidating this Agreement, changes in the Work within the general scope of the Contract Documents consisting of additions, deletions or other revisions to the Amendments to this AGREEMENT or the estimated cost of the work, compensation for Design Phase Services, the DEVELOPER'S Fee andlor the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion being adjusted accordingly. All such changes in the Work shall be authorized by applicable Change Order, and shall be perfonned under the applicable conditions of the Contract Documents. 9.1.2 Each Amendment to the AGREEMENT and/or estimated Cost of the Work resulting from a Change Order shall clearly separate the amount attributable to compensation for Design Phase Services, other Cost of the Work and the DEVELOPER'S Fee, with the DEVELOPER'S Fee not to exceed Ten percent@%). 9.1.3 The Owner and the DEVELOPER shall negotiate in good faith Amendments to the AGREEMENT, adjustment in the share of the profits after all expenses. are paid, the estimated Cost of the Work, compensation for Design Phase Services,the DEVELOPER'S Fee and/or the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion and shall conclude these negotiations as expeditiously as possible. Acceptance of the Change Order and any Amendments to the Agreement, adjustment in the share of the profits after all expenses are paid, the estimated Cost of the Work, compensation for Design Phase Services, the DEVELOPER'S Fee and/or the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion shall not be unreasonably withheld. 9.2 WORK CHANGE DIRECTIVES 9.2.1 The Owner and the DEVELOPER shall negotiate expeditiously and in good faith for appropriate Amendments, as applicable, to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the . DEVELOPER'S Fee, the Estimated Date of Substa.ntial Completion and/or the Estimated Date of Final Completion, andifapptopriatethe COmpensatibn for Oesign Phase Services, arising out Of Work Change Directives. As the changed work is cornpleted, the DEVELOPER shall submit its costs for such work with the application for payment beginning with the next application for payment within thirty (30) days of the issuance of the Work Change Directive, and shall be paid for out of the PROJECT funds. 9.3 MINOR CHANGES IN THE WORK PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909.335-9576 duorea@msn.com 9.3.1 The DEVELOPER may make minor changes in the design and construction of the PROJECT consistent with the intent of the Contract Documents which do not involve an amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee, the Estimated Date of Substantial Completion andlor the Estimated Date of Final Completion, and do not materially and adversely affect the design of the PROJECT, the quality of any of the sI!)/ .Ihvf) OAR Initials AVC:Octla:V Page 25 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL ,CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the east at the Work Plus a Developer Fee with Profit Sharing) materials or equipment specified in the Contract Documents, the performance of any materials, equipment or systems specified in the Contract Documents, or the quality of workmanship required by the Contract Documents. 9.3.2 The DEVELOPER shall promptly inform the Owner in writing of any such changes and shall record such changes on the DEVELOPER Documents maintained by the DEVELOPER. 9.4 UNKNOWN CONDIT10NS If in the performance of the Work the DEVELOPER finds latenlt-concealed or subsurface physical conditions which are materially different from the conditions the DEVELOPER reasonably anticipated, or if physical conditions are materially different from those normally encountered and generally recognized as inherent in the kind of work provided for in this Agreement then an Amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee, the Estimated Date of Substantial Completion and/or th.e Estimated Date of Final Completion, and if appropriate the compensation for Design Phase Services, shall be equitably adjusted by Change Order within a reasonable time after the conditions are first observed. The DEVELOPER shall provide the Owner with written notice within the time period set forth in Paragraph 9.6. 9.5 DETERMINATION OF COST 9.5.1 CLAIMS FOR ADDITIONAL COST OR TIME For any claim for an increase in PROJECT Costs as a result of an Amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee and the Estimated Date of Substantial Completion and/or the Estimaied Date of Final Completion, and if appropriate the compensation for Design Phase Services, the DEVELOPER shall give the Owner written notice of the claim within twenty-one (21) days after the occurrence giving rise to the claim or within twenty-one (21) days after the DEVELOPER first recoQllizesthe condition giving rise to the claim, wihichever is later. Except in an emergency, noticeshali be given before procell<:tinQ with theWork. Claims for design and estimating costs incurred in connection with possible changes requested by the Owner, but which do not proceed, shall be made in writing within twenty-one (21) days after the decision is made not to proceed. Any change including but not limited to the Amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee, the Estimated Date of Substantial Completion and/or the Estimated Daie of Final Completion, and if appropriate the compensation for Design Phase Services, resulting from such claim shall be authorized by Change order. 9.6 EMERGENCIES In any emergency affecting the safety of persons andlor property, the DEVELOPER shall act, at its discretion, to prevent threatened damage, injury or loss. Any change in the PROJECT Costs as a result of an Amendment to the AGREEMENT, adjustment in the share of the profits after all expenses are paid, PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909-335-9576 duprea@.msn,com ~~ '..4rfJ AilEDC Initials Page 26 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) estimated Cost ofth!" Work, the DEVELOPER'S Fee and the Estimated Date of Substantial Completion and/or the Estimated Date of Final Completion, and if appropriate the compensation for Design Phase SelVices, on accolint of emergency work shall be determined as provided in this Article. A written notice will be provided to the owner within 14 days. 9,7 CHANGES IN LAW In the event any changes in laws or regulations affecting the performance of the Work are enacted after either the date of this Agreement or the date an Amendment to the AGREEMENT is accepted by the Owner and set forth in the Amendment to this Agreement, whichever occurs later, the Amendment to this .AGREEMENT, adjustment in the share of the profits after all expenses are paid, estimated Cost of the Work, the DEVELOPER'S Fee and the Estimated Date at. Substantial Completion and/or the Estimated Date of Final Completion, and if appropriate the compensation for Design Phase SelVices, shall be equitably adjusted by Change Order. ARTICLE 10 PAYMENT FOR CONSTRUCTION PHASE SERVICES 10.1 PROGRESS PAYMENTS 10.1.1 On the Twentieth (2(}'l1~of each month after the Construction Phase has commenced, the DEVELOPER shall submit to the Owner an application for payment consisting of the Cost of the Work performed up to the Twentieth (20l!ll,Qill! of the month, including the cost of all material suitable stored on the Worksite or at other locations approved by the Developer, along with a 10% DEVELOPER'S Fee. Approval of payment applications for S(jch stored materials Shall be conditioned upon submission by the . DEVELOPER of bills ()f sal.e ;md!iPplicable insurance'or prior to submission of the next application for payment,theOEVELOPER shallfumish a copy to the OWner a statement accounting for the disbursement of funds received under the previous application. 10.1.2 Within ten (10) days after receipt of such application, the' DEVELOPER shall be paid the appropriate amount for which application for payment is made, less amounts if any previously paid. 10.1.3 If the OWner has not paid the DEVELOPER at the time payment of any amount becomes due, then the DEVELOPER may, at any time thereafter, upon selVing written notice that the Work will be stopped Within seven (7) days after receipt of the notice by the OWner, and after such seven day period, stop the Work until payment of the amount owing has been recovered. .. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 95t-662-3872; Fax 909-335-9576 . duorea((llmsn.com e# OAR In ials ^=1lQ Page 27 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPME~T AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 10.1.4 Payments due but unpaid pursuant to Sub-paragraph 10.1.2. less anY amount retained pursuant to Paragraphs 10.2 and 10.3 may bear interest from the date payment is due at the prime rate prevailing at the place of the PROJECT. . 10.1.5 The progress-payment, Owner's occupancy or use of the PROJECT, whether in whole or in part, shall not be deemed an acceptance of any Work not confonning to the requirements of the Contract Documents. 10.1.6 Upon Substantial Completion of the Work, the DEVELOPER shall be paid the unpaid balance of the Cost of the Work, compensation for Design Phase Services and the DEVELOPER'S Fee, less fifteen percent (15%) of the cost of completing any unfinished items as agreed to between the Owner and the DEVELOPER as to extent and time for completion. The Developer thereafter shall be paid the Developer's monthly fee for the amount retained for unfinished items as each item is completed. 10.2 RETAINAGE No retainage shall be withheld for each progress payment. 10.3 left Blank for Future Use. 10.4 FINAL PAYMENT 10.4.1 Final Payment, consisting of the unpaid balance of the Cost of the Work, compensation for Design Phase Services, DEVELOPER'S Fee, reimbursement of DEVELOPER Loan Funds and Percentage of profits after all expenses are paid, shall be due and payable when the work is fully completed. Before issuance of final payment, the Owner may request satisfactory evidence that all payrolls, material bills and other indebtedness connected with the Work have been paid or otherwise satisfied. 10.4.2 In making final payment the Owner waives all claims except for. .1 outstanding liens; .2 improper workmanship or defective materials appearing within one year after the Estimated Date of Substantial Completion; . .3 work not in confonnance with the Contract Documents; and .4 tenns of any special warranties required by the Contract Documents. 10.4.3 In accepting final payment, the DEVELOPER waives all claims except those previously made in writing. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 dUDrea(i!)msn.com Oldal(l rtrD AVCEDC Initials Page 28 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work " Plus a Developer Fee with Profit Sharing) ARTICLE 11 INDEMNITY, INSURANCE, AND WAIVER OF SUBROGATION 11.1 IDEMNITY 11.1.1 To the fullest extent pennitted by law, the DEVELOPER shall defend, indemnify and hold hannless the Owner, the Owner's officers, directors, members, consultants, agents and employees from all claims for bodily injury and property damage (other than to the Work itself and other property required to be insured under Paragraph 11.5 owned by or in the custody of the owner), that may arise from the perfonnance of the Work, to the extent of the negligence attributed to such acts or omissions by the DEVELOPER, Subcontractors or anyone employed directly or indirectly by any of them or by anyone for whose acts any of them may be liable. The DEVELOPER shall not be required to defend, indemnify or hold hannless the Owner, the Owner's officers, directors, members, consultants, agents and employees for any acts, omissions or negligence of the Owner, the Owner's officers, directors, members, consultants, employees, agents or separate contractors. 11.1.2 To the fullest extent pennitted by law, the Owner shall defend, indemnify and hold harmless the DEVELOPER, its officers, directors or members, Subcontractors or anyone employed directly or indirectly by any of them or anyone for whose acts any of them may be liable from all claims for bodily injury and property damage, other than property insured under Paragraph 11.5, that may arise from the perfonnance of work by Others, to the extent of the negligence attributed to such acts or omissions by Others. 11.2 DEVELOPER'S LIABILITY 11.2.1 The DEVELOPER shall obtain find maintain insurance coverage in accordance . with the Redevelopment Agency (lhe "Agef\cy") offhe City ofSanl'iemardino's "2006 AFFORDABLE SINGLE FAMILY HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT - FOUR AGENCY LOTS". 11.4 OWNER'S L1ABIL TY INSURANCE The Owner shall be listed as an additional named insured on the Developers insurance policies required by the Redevelopment Agency (the "Agency") of the City of San Bernardino's "2006 AFFORDABLE SINGLE FAMILY HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT - FOUR AGENCY LOTS". 11.4.1 The Owner may at its own expense obtain additional insurance other than what is provided by the Developer and shall name the Developer as an additional named insured on all additional policies obtained. The cost for this additional insurance shall not be included in the overall PROJECT costs PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909-335-9576 duoreatillmsn.com OArdt! itP'D AVCEDC Initials Page 29 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501((:)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL . CONDITIONS BElWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) 11.5 INSURANCE TO PROTECT PROJECT 11.5.1 The Developer shall obtain and maintain insurance in accordance with the Redevelopment Agency (the "Agency") of the City of San Bernardino's "2006 AFFORDABLE SINGLE FAMILY HOUSING DISPOSITION AND DEVELOPMENT AGREEMENT - FOUR AGENCY LOTS". 11.6 WAIVER OF SUROGATlON 11.6.1 The Owner and the DEVELOPER waive all rights against each other, the Architect/Engineer, and any of their respective employees, agents, consultants, Subcontractors, Material Suppliers and Sub-subcontractors for damages covered by the o,CGeS"5 insurance provided pursuant to Paragraph 11.5 to the extent that they may have\to the proceeds of such insurance held by the DEVELOPER as trustee. The DEVELOPER shall require similar waivers from the Architect/Engineer and all Subcontractors, and shall require each of them to include similar waivers in their sub-subcontracts and consulting agreements. 11.6.2 The Owner waives subrogation against the DEVELOPER, the Architect/Engineer, Subcontractors. Material Suppliers and Sub-subcontractors on all property and consequential loss policies carried by the Owner on adjacent properties and under property and consequential loss policies purchased for the PROJECT after its completion. 11.6.3 The Policies shall also be endorsed to state that the carrier waives any right of subrogation against the DEVELOPER, the Architect/Engineer, Subcontractors, Material Suppliers, or Sub-subcontractors. 11.7 MUTUAL WAIVER OF CONSEQUENTIAL DAMAGES The Owner and the DEVELOPER agree to waive all claims against the other for all consequential damages that may arise out olor related to this Agreemenl The Owneragrees to waive damages including but not limited to the Owner's loss oluse of the Property, all rental eXpenses incurred, loss of services of employees, loss of business, loss of financing, principal office overhead and profits, lost olprofits not related to this PROJECT, or loss of reputation. The DEVELOPER agrees to waive damages including but not limited to the loss of business, loss of financing, principal office ovemead and profits, loss of profits not related 10 this PROJECT, or loss of reputation. This paragraph shall not be construed to preclude contractual provisions for liquidated damages when such provisions relate to direct damages only. The provisions of this paragraph shall govern the termination of this Agreement and shall survive such termination. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.3872; Fax 909.335.9576 duprea(illmsn.com (J( ArD AVCEDC Initials Page 30 . ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis. of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ARTICLE 12 SUSPENSION AND TERMINATION OF THE AGREEMENT 12.1 SUSPENSION 12.1.1 The Owner may not order the DEVELOPER verbally or in writing to suspend, delay or interrupt all or any part of the Work without cause for any such period of time as the Owner may determine to be appropriate for its convenience. 12.2 TERMINATION BY OWNER . Any Event of Default on the part of the DEVELOPER, as defined under the City of San Bemardino Redevelopment Agency Affordable Single Family Housing Disposition and Development Agreement shall also constitute a material breach of this agreement, and except as may otherwise be agreed upon in writing signed by the relevant parties, the termination of the above-referenced agreement shall also result in the simultaneous termination of this agreement. 12.3 TERMINATION BY THE DEVELOPER 12.3.1 Upon five (5) days written notice to the Owner, the DEVELOPER may terminate this Agreement for any of the following reasons: .1 if the Work has been stopped for a sixty (60) day period a. under court order of other governmental authorities having jurisdiction; or b. as a result of the deciaration of a national emergency of other govemmehtalact during wliich,thr{lugh no ad or fault of the DEVELOP"fER, materials are not available; .2 if the Work is suspended by the Owner for sixty (60)consecutive days; 12.3.2 If the Owner has for thirty (30) days failed to pay the DEVELOPER pursuant to Sub-paragraph 10.1.2, the DEVELOPER may give written notice of its intent. to terminate this Agreement. If the DEVELOPER does not receive payment within five (5) days of giving written notice to the Owner, thlln upon five (5) days' additional written notice.tothll Owner, the DEVELOPER may terminate this Agreement. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax: 909.335-9576 duprea@lmsn.com 12.3.3 Upon termination by the DEVELOPER in accordance with this Sub-paragraph, the DEVELOPER shall be entitled to recover from the Owner payment for all Work executed and for all proven loss, cost or expense in connection with the Work, plus all 1J,t/-. OAR Inilia 5 AvcdlD Page 31 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTlON501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BElWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) demobilization costs and actual damages. In addition, the DEVELOPER shall be paid an amount calculated as set forth either in Sub-paragraph 12.3.1 or 12.3.2, depending on when the termination occurs, and Sub-paragraph 12.3.3. ARTICLE 13 DISPUTE RESOLUTION 13.1 WORK CONTINUANCE AND PAYMENT Unless otherwise agreed inwriting, the DEVELOPER shall continue the Work and maintain the approved schedules during all dispute resolution proceedings. If the DEVELOPER continues to perform, the Owner shall continue to make payments in accordance with the Agreement. 13.2 INITIAL DISPUTE RESOLUTION If a dispute arises out of or relates to this Agreement or its breach, the parties shall endeavor to settle the dispute first through . direct discussions. If the dispute cannot be settled through direct discussions, the parties shall endeavor to settle the dispute by mediation under the Construction Industry Mediation Rules of the American Arbitration Association before recourse to the dispute resolution procedures contairied~n this Agreement. The location of the mediation shall be the same city that contains the location of the PROJECT. Once one party files a request for mediation with the other contracting party and with the American Arbitration Association, the parties agree to conclude such mediation within sixty (60) days of filing of the request. Either party may terminate the mediation at any time after the first session, but the decision to terminate must be delivered in person by the party's representative to the other party's representative and the mediator. 13.3 DISPUTE RESOLUTION If the dispute cannot be settled by mediation within sixty (60) days, the parties shall submit the dispute to any dispute resolution process set forth in Exhibit NO.1 to this Agreement. 13.4 .. MUL TlPARTYPROCEE8fNG .The parties agree that all parties necessary to resolve a claim shall be. parties to the same dispute resolution proceeding. Appropriate" provisions shall be included in all other contracts relating to the Work to provide for the consolidation of such dispute resolution proceedings. 13.5 COST OF DISPUTE RESOLUTION All parties shall bear the costs of their own legal fees, but shall equally share any mediation fees and costs. The prevailing party in any dispute resolution arising out of or relating to this Agreement or its breach that is resolved by the dispute resolution process set forth in Exhibit Number. 1to this . Agreement shall be entitled to recover from the other party those reasonable attorney's fees, costs and expenses incurred by the prevailing party in connection with such dispute resolution process after direct discussions and mediation. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele, 951.662.3872; Fax 909-335-9576 duorea(a!msn.com o~, ~ A VCEOC Initials Page 32 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT , CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work 'Plus a Developer Fee with Profit Sharing) 13.6 LIEN RIGHTS Nothing in this Article shall limit any rights or remedies not expressly waived, which either party may have under the law. ARTICLE 14 MISCELLANEOUS PROVISIONS 14.1 ASSIGNMENT Neither the Owner nor the DEVELOPER shall assign its interest in this Agreement without the written consent of the other except as to the assignment of proceeds. The terms and condition of this Agreement shall be binding upon both parties, their partners, successors, assigns and legal representatives. Neither party to this Agreement shall assign the Agreement as ,a whole without written consent of the other except that the Owner may assign the Agreement to a wholly -owned subsidiary of the Owner when the Owner has fully indemnified the DEVELOPER or to an institutional lender providing construction financing for the PROJECT as long as the assignment is no less favorable to the DEVELOPER 1han this Agreement. In the,event of such assignment, the DEVELOPER shall execute all consents reasonably required. In such event, the wholly owned subsidiary or lender shall assume the Owner's rights and obligations under the Contract Documents. If either party attempts to make such an assignment, that party shall nevertheless remain legally responsible for all obligations under the Agreement, unless otherwise agreed by the other party. 14.2 GOVERNING LAW This Agreement shall be governed by the law in effect at the location of the PROJECT of the State of California. 14.3' SEVERABILITY The partial or complete invalidity of anyone or more provisions of this Agreement shall not affect the validity or continuing force and effect of any other provision. 14.4 ,NO WAIVER OF PERFORMANCE, The failure of either party to insisL'in , anyone or more instances, on the performance of any ofthelerms, covenants or conditions of this AgreemenL or to exercise any of its rights shall not be construed as a: waiver or relinquishment of such term, covenant, condition or right with respect to further performance. 14.5 TITLES AND GROUPINGS The titles to the articles of this Agreement are for ease of reference only and shall not be relied upon or cited for any other purpose. The grouping of the articles in this Agreement and of the Owner's specifications under the various headings is solely for the purpose of provisions, the use of paragraphs or the use of headings be construed to limit or alter the meaning of any provisions. 14.6 . JOINT DRAFTING The parties to this Agreement expressly agrees that this Agreement was jointly drafted. and that both had opportunity to negotiate its terms and to obtain the assistance of counsel in reviewing its terms prior to execution. Therefore, the PO, BOX 1599, SAN BERNARDINO, CA 92402 ,~' / / ,A ~ Tele.951-662.3Bn;Fax909.335-9576 ~ A'( 1/ dupreaIWmsn.com' OAR Initi Is ' AVCEDC Initials Page 33 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Agreement shall be construed neither against nor in favor of either party, but shall be construed in a neutral manner. 14.7 RIGHTS AND REMEDIES The parties' rights, liabilities, responsibilities and remedies with respect to this Agreement, whether in contract, tort, negligence or otherwise, shall be exclusively those expressly set forth in this Agreement. 14.8 OTHER PROVISIONS PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335-9576 duprea@msn.com LI/ o Initials )<<0 AVCEDC Initials Page 34 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFITIRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER . . (Where the J;3asis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) ARTICLE 15 EXISTING CONTRACT DOCUMENTS The Contract Documents in existence at the time of execution of this Agreement are as follows: 1. DESIGN BUILD AGREEMENT FOR DEVELOPMENT SERVICES, dated: May 10,2005, which is superceded by this Development Agreement. 2. Change of Owners Authorized Representative (OAR), dated November 16, 2005 3. As defined in Sub-paragraph 2.4.1, the following Exhibits are a part of this Agreement: EXHIBIT NO.1 Dispute Resolution menu, EXHIBIT NO.2 Change of Owners Authorized Representative (OAR), dated November 16, 2005 This Agreement is entered into as of the date entered in Article 1. ATTEST: 3/3h? . OWNER: Inland Em ire Concerned African American C BY: PRtNT NAME: Owusu HQdal"i . PRINT TITLE: Owners Authorized Representative '317106 BY: ATTEST: PRINT NAME: Antonio F. Dupre Sr PRINT TITLE: Presidentl CEO PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335-9576 duprea@msn.com (!;I OAR In' als AP1? AVCECic Initials Page 35 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501 (c)(3) COMMUNITY DEVELOPMENT CORPORATION . DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) Exhibit No.1 Dated j.AJJt.. '(t..,,^- '5! ~oo-6 DISPUTE RESOLUTION MENU Pursuant to Paragraph 13.3, if neither direct discussions nor mediation successfully resolves the dispute, the parties agree that the following shall be used to resolve the . dispute: . Dispute Review Board The. Dispute Review Board is composed of one member selected by the Owner, one selected by the DEVELOPER and a third member selected jointly by the Owner and DEVELOPER This Board shall be selected before the time for construction commences, shall meet periodically, and shall make advisory decisions, which may be introduced into evidence at any subsequent dispute resolution process. If a Dispute Review Board is selected, it is understood its review will precede mediation. Litigation Action may be filed in the appropriate state or federal court located in the jurisdiction in which the PROJECT is located. PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909.335-9576 duprea@.msn.com tI# OAR Initials ~ AVCEDC Initials Page 36 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON.f>ROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Paymeht is the Cost ofthe Work Plus a Developer Fee with Profit Sharing) Exhibit No.2 Dated: -f'I\~vck ") I:;A06-6 Change of Owners Authorized Representative (OAR), dated November 16, 2005 PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909-335.9576 dUDrealil!msn.com ~II o Inmals 4YP AVCEDC Initials Page 37 l;l;\~i{~;f:; ." -";-"',,, + ,'';' ARROYO VALLEY COMMUNITYECONOMIC DEVELOPMENT CORPORATION. A.NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with ProfitSharing) Exhibit No.3 Dated-I'^-o... y C h 7/ 2{) 0 -b Conceptual Sources & Uses Proforma PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662.3872; Fax 909.335-95T6 dupreatiilmsn.com OAft! ~ AVCEDC Initials . Page 38 I ~ N ~. ~N~ N~ ~~ ON N~ 2g~ ~ :0 ")CI) f') ...:t>i N w ~ ~ ----...-...--------.... o o ~ .,; o~o o~o ~~o N-~ci ~~ 000 000 G 000,() CO') c:i ci 11"1- 0> ~~ ~ N ~ _ffl.........._______W....__ ;I' ~ ~ 8 ;I' '" oeo 0...... .. o o ci o ~ ;I' o ~ ;I' ~ N ~ 'E ~ u ~ ~ ., a .f! G) 111 ~ II c::: ~ ::;J . c 1: ~ co.!! :::~ Iii j !! i3 i ~ lea OU:a::Gl 8- 0 C C j;;: .. 0 "I~~ .OJ ! t ~~~- ~.~.s:i .., UflI ~Gl.s' E-g'8~ ::)>1..,0 ...2~ _cn ~<( .: i! i~ ~.. -;;:: lU ~.e iu...:S c",,'J!! ~ ~~-i~~~e~~cu ~tE_c~a g= .. 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" ~ j'j 0: m U> <g "-. :;:. ~: .~ o ~C1 <' l;.i [ 8.!1lf . -' c. ~E ~ E u~o~ ~~li;' EO-ilia. u..c ,g'C (:~o~ ~a:!:o ~ll.l.iL 1I::J::J::J~ n.malm~ ~ '" " ~ o . iil : ,..: .i ~ ~ ~. N w _ o o G ~ :! ~ .. e w - " <; I- i' ~ !1-. " n: o 0: .. ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON.f'ROFIT IRS SECTION 501(c){3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) AMENDMENT NO.1 Pursuant to Paragraph 3.2 of the Agreement dated Between the Owner, Inland Em ire Concerned A rican American Churches and the DEVELOPER, Arro 0 Valle Com CorDoration 6~. . . for Wests ide Homes PROJECT ~I . velo. pment) Assessors Parcel Number's: 0144-131-21; 0144-131-36; 0144- .6; 144-123-03 (4 specific lots), San Bernardino, CA 92411 (~PRO C , the Owner and the Devel e sire to establish an Amendment to the Agreement for the W'"'. Th'.'O"~" "" ""ROP'" '9~" ,,,,- ARTICLE 1 PROFIT SHARING The DEVELOPER'S PROFIT SHARING AGREEMENT for the Work, including the Cost of the Work as defined in Article 8 and as set forth in Paragraph 2.1, is Dollars ($ The AGREEMENT is for the perfonnance of the Work in accordance with the documents listed below, which are part of the Agreement PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951.662.38n; Fax 909.335-9576 dUDrea@msn.com I) OAR Initials AVCEDC Initials Page 39 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND DEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) APPENDIX_ APPENDIX_ APPENDIX_ APPENDIX_ APPENDX_ APPENDIX_ APPENDIX_ Drawings and Specifications, including Addenda, if any, dated _ , --pages. Allowance Items, dated pages. Assumptions and Clarifications: dated pages. Schedule of Work, dated pages. Alternate Prices, dated pages. Unit Prices, dated pages. Additional Services included, dated pages. APPENDIX_ The 2006 City of San Bernardino Redevelopment Agency's Affordable Single Family Housing Disposition and Development Agreement, dated ~ pages. ARTICLE 2 ESTIMATBDDATE OFStllSSTANTIAL COMPL.ETION The Estimated Date of Substantial Completion of the Work is / ARTICLE 3 ESTIMATED DATE OF FINAL COMPLETION PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909.335-9576 duprea@msn.com "':.. . OAR Inffials AVCEDC Inffials Page 40 ARROYO VALLEY COMMUNITY ECONOMIC DEVELOPMENT CORPORATION A NON-PROFIT IRS SECTION 501(c)(3) COMMUNITY DEVELOPMENT CORPORATION DEVELOPMENT AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND1lEVELOPER (Where the Basis of Payment is the Cost of the Work Plus a Developer Fee with Profit Sharing) . ,,..., The Estimated Date of Final Completion of the WorK is: or within L-) days after the Estimated Date of Substantial Completion. subject to adjustments as provided for in the Contract Documents. This Amendment is entered into as of OWNER: Inland Empire Concerned African American Churches ATTEST: BY: PRINT NAME: Owusu Hodari PRINT TITLE: Owners Authorized Representative DEVELOPER: Arroyo Valley Community Economic Development Corporation ATTEST: BY: PRINT NAME: Antonio F. Dupre Sr PRINT TITLE: Presidentl CEO PO BOX 1599, SAN BERNARDINO, CA 92402 Tele. 951-662-3872; Fax 909-335-9576 dUDrea@msn.com OAR Initials AVCEDC Initials Page 41 EXHIBIT "F" CERTIFICATE OF COMPLETION .15 20 EXHIBIT "F" CERTIFICATE OF COMPLETION WHEN RECORDED, MAIL TO: Arroyo Valley Community Economic Development Corporation Attn.: Antonio Dupre, Sr., President P.O. Box 1599 San Bemardino, California 92402 (Space Above Line For Use By Recorder) CERTIFICATE OF COMPLETION I, , the Secretary of the Redevelopment Agency of the City of San Bernardino (the "Agency") hereby certify as follows: Section 1. The improvements required to be constructed in accordance with that certain 2006 Affordable Single-Family Disposition and Development Agreement (HOME Funds - Four Agency Lots) (the "Agreement") dated November 20, 2006, by and among the Agency and Arroyo Valley Community Economic Development Corporation, a California non-profit benefit corporation, and an approved Community Housing Development Organization ("CHDO"), and the Inland Empire Concerned African American Churches, a California non-profit corporation (collectively, the "Developer"), on Assessor's Parcel Number 0144-131-21, Assessor's Parcel Number 0144-131-36, Assessor's Parcel Number 0144-123-03 and Assessor's Parcel Number 0144-123-46 (collectively, the "Property") more fully described in Exhibit "A" attached hereto and incorporated herein by this reference has been completed in accordance with the provisions of said Agreement. The Agreement or a memorandum thereof is recorded at of the Official Records of San Bernardino County, California. Section 2. This Certificate of Completion shall constitute a conclusive determination of satisfaction of the agreements and covenants contained in the Agreement with respect to the obligations of the Developer, and its successors and assigns to construct and develop the Project (as defined in the Agreement), excluding any minor building "punch-list" items, and including any and all buildings and any and all parking, landscaping and related improvements necessary to support or which meet the requirements applicable to the Project and its use and occupancy of the Property, whether or not said improvements are on the Property or on other property subject to the Agreement, all as described in the Agreement, and to otherwise comply with the Developer's obligations under the Agreement with respect to the Property and the dates for the beginning and completion of construction of improvements thereon under the Agreement. The Agreement or any memorandum thereof recorded as referenced above is released and no longer shall affect, burden or be binding on the Property or the .15 21 Developer or its successors and assigns. However, this Certificate of Completion shall not affect the rights of the Agency to enforce any covenant in the Grant Deed of a Public Agency and Affordable Single Family Housing Development, Use and Occupancy Conditions, Covenants and Restrictions pursuant to which the Property was conveyed under the Agreement. Said Agreement is an official record of the Agency and a copy of said Agreement may be inspected in the office of the Secretary of the Redevelopment Agency of the City of San Bernardino located at 201 North "E" Street, Suite 301, San Bernardino, California, during regular business hours. Section 3. The Property to which this Certificate of Completion pertains is more fully described in Exhibits "A" attached hereto. DATED AND ISSUED this day of ,200_. By: , Executive Director Redevelopment Agency of the City of San Bernardino .15 22 EXHIBIT "A" LEGAL DESCRIPTION OF THE PROPERTY APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19, 19991 AS INSTRUMENT NO. 91-274307,OFFICIALRECORDS. .15 23 EXHIBIT "G" MEMORANDUM OF AGREEMENT .15 24 EXHIBIT "G" MEMORANDUM OF AGREEMENT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: Redevelopment Agency of the City of San Bernardino 201 North "E" Street, Suite 301 San Bernardino, CA 9240 I Recordin~ Fee Exempt Pursuant to Government Code Section 6103 (Space Above Line Reserved for Use By Recorder) MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT (this "Memorandum") is dated as of November 20, 2006, by and among the Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic (the "Agency"), and Arroyo Valley Community Economic Development Corporation ("Arroyo"), a California non-profit benefit corporation, and an approved Community Housing Development Organization ("CHOO"), and the Inland Empire Concerned African American Churches (the "Participant"), a California non-profit corporation (Arroyo and the Participant shall collectively be referred to as the "Developer"). I. Agreement. The Agency and the Developer entered into that certain 2006 Affordable Single-Family Disposition and Development Agreement (HOME Funds - Four Agency Lots) (the "Agreement") dated November 20, 2006, for the purpose of providing for the purchase, construction and development by the Developer of real property consisting of land located in the City of San Bernardino, County of San Bernardino, California (as more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference), Assessor's Parcel Number 0144-131-21, Assessor's Parcel Number 0144-131-36, Assessor's Parcel Number 0144-123-03 and Assessor's Parcel Number 0144-123-46 (the "Property"). 2. Incomoration of Agreement. This Memorandum is for informational and notice purposes only and nothing contained herein shall be deemed to in any way modify or otherwise affect any of the provisions of the Agreement. This Memorandum is subject to all of the provisions of the Agreement and in the event of any inconsistency between the provisions of the Agreement and this Memorandum, the provisions of the Agreement shall prevail. 3. Countemarts. This Memorandum may be executed in any number of counterparts, each of which shall constitute an original and all of which shall constitute but one and the same document. .15 25 IN WITNESS WHEREOF, the undersigned have executed this Memorandum of Agreement as of the day and year first above written. DEVELOPER Arroyo Valley Community Economic Development Corporation, a California non-profit benefit corporation Dated: By: Its: Inland Empire Concerned African American Churches, a California non-profit corporation By: Its: Date: Name: By: Its: Name: AGENCY Redevelopment Agency of the City of San Bernardino, a public body, corporate and politic By: Maggie Pacheco, Executive Director Date: Approved as to Form and Legal Content: By: Agency Counsel [ALL SIGNATURES MUST BE NOTARIZED] .15 26 EXHmIT"A" LEGAL DESCRIPTION OF THE PROPERTY APN: 0144-131-21 LOT 20, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-131-36 LOT 33, TRACT NO. 2340, SUNSHINE HOMES TRACT NO.2, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 51, RECORDS OF SAID COUNTY. APN: 0144-123-03 LOT 2, BLOCK 3, TRACT NO. 2301, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPTING AND RESERVING ONTO GRANTORS AND GRANTOR'S RESPECTIVE HEIRS, SUCCESSORS AND ASSIGNS ALL OIL, GAS OTHER HYDROCARBON SUBSTANCES, MINERALS, METALS AND GEOTHERMAL RESOURCES LYING WITHIN AND UNDER THAT PORTION OF THE LAND CONVEYED WHICH LIES BELOW A DEPTH OF 500 FEET FROM THE PRESENT SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND, WITHOUT ANY RIGHTS TO ENTER UPON OR INTO THE SURFACE AND TOP 500 FEET OF THE SUBSURFACE OF SAID LAND. APN: 0144-123-46 LOT 1, BLOCK 3, TRACT NO. 2301, SUNSHINE HOMES TRACT, IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER PLAT RECORDED IN BOOK 33 OF MAPS, PAGE 17, RECORDS OF SAID COUNTY. EXCEPT THAT PORTION OF STREET AS CONVEYED TO THE STATE OF CALIFORNIA BY DEED RECORDED FEBRUARY 19, 1957 IN BOOK 4159, PAGE 237, OF OFFICIAL RECORDS. EXCEPTING THEREFROM 100% OF THE SUBSURFACE MINERAL RIGHTS WHETHER SOLID, LIQUID, OR GASEOUS, INCLUDING BUT NOT LIMITED TO OIL, GAS HYDROCARBON SUBSTANCES, AND WATER, LOCATED BENEATH A DEPTH OF 100 (ONE HUNDRED) FEET BELOW THE SURFACE, BUT WITHOUT RIGHT TO SURFACE ENTRY AS CONVEYED TO BLUE CLYDE, INC. BY CORPORATION QUITCLAIM DEED RECORDED JULY 19,19991 AS INSTRUMENT NO. 91-274307, OFFICIAL RECORDS. .15 27